"Investors Should Wait Before Buying Mexican Bonds, Lehman Says "
By Carlos Manuel Rodriguez and Valerie Rota
"Aug. 26 (Bloomberg) -- Investors should wait before buying Mexican fixed-rate, peso-denominated bonds until economists' inflation expectations trend lower, according to Lehman Brothers Holdings Inc."
"``We recommend caution,'' Mauro Roca, a New York-based Latin America market strategist, said in a Bloomberg Television interview. Declining local yields will find ``certain resistance because inflation expectations won't yet adjust downwards.''"
"Anticipation of surging inflation suggests investors should buy Mexico's inflation-linked two- and three-year bonds, Roca said. Two- and three-year fixed-rate debt in pesos will be ``attractive'' once inflation expectations abate, Roca said."
"Mexico's annual inflation will quicken to as much as 5.8 percent by year-end from 5.5 percent in the first half of August, Roca said. His estimate compares with Banco de Mexico's inflation forecast of 5.5 percent to 6 percent in the fourth quarter."
"Yields on Mexico's 9 percent bond due in December 2011 have risen 1.1 percentage points since touching a record low of 7.26 percent on Feb. 8. The bond little changed at 8.36 percent at 3:53 p.m. New York time. The price fell 0.01 centavo to 101.81 centavos per peso, according to Banco Santander SA."
To contact the reporters on this story: Carlos Manuel Rodriguez in New York at pt email@example.com; Valerie Rota in Mexico City at firstname.lastname@example.org.
"Last Updated: August 26, 2008 16:02 EDT"
Copper Drops on Speculation Sagging Global Growth to Cut Demand
By Millie Munshi
"Aug. 26 (Bloomberg) -- Copper dropped on signs that slumping economic growth is spreading globally, spurring concern demand will decline for the metal used in pipes and wires."
"Business and consumer confidence in Germany, Europe's biggest economy, dropped in July, separate reports showed today. U.K. mortgage approvals last month held close to the lowest in at least 11 years, the British Bankers' Association said. Before today, copper dropped 19 percent from a record in May."
"``The air continues to seep out of commodities, as participants come to realize that the U.S. slowdown is no longer `ring-fenced,' but spreading around the globe with alarming speed,'' Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said in a report."
"Copper futures for December delivery declined 4.8 cents, or 1.4 percent, to $3.4165 a pound on the Comex division of the New York Mercantile Exchange. The price reached the all-time high of $4.2605 on May 5."
"Germany's seasonally adjusted gross-domestic product fell last quarter by 0.5 percent, the biggest drop since the second quarter of 1998, the Federal Statistics Office in Wiesbaden said today. France's stock of new, unsold homes touched a record in the second quarter, when the euro region's second-largest economy shrank, a report showed yesterday."
"``If you look at all the European data, it's clear that we continue to have a global economic malaise that's going to persist in limiting the ability of the copper market to rally,'' said William O'Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey."
"Copper also dropped as the dollar's rally eroded the appeal of the metal as a hedge against inflation. The U.S. currency reached $1.4571 against the euro, the highest since Feb. 14."
"A rally by the dollar in the third quarter curbed demand for commodities as investors shunned metals, grains and energy futures as alternative assets. The Reuters/Jefferies CRB Index of 26 raw materials has dropped 14 percent since June 30. The U.S. currency has climbed 9.6 percent from a record against the euro reached on July 15."
"``The pattern of the dollar is clearly higher, and you'll see copper and other commodities continue to face pressure,'' O'Neill said."
"On the London Metal Exchange, copper for delivery in three months dropped $80, or 1 percent, to $7,580 a metric ton ($3.44 a pound). The price has gained 3.6 percent in the past 12 months."
To contact the reporter on this story: Millie Munshi in New York at email@example.com
"Last Updated: August 26, 2008 14:17 EDT"
"Fannie, Freddie Mortgage Profit Reaches 10-Year High (Update1) "
By Jody Shenn
Aug. 27 (Bloomberg) -- The crisis of confidence that sent Fannie Mae and Freddie Mac debt costs to record highs above U.S. Treasuries is also providing the mortgage-finance companies with the biggest profits on new investments since at least 1998.
"The current-coupon mortgage bonds Fannie and Freddie buy yield about 40 basis points, or 0.40 percentage point, more than what they pay to borrow by selling benchmark bonds, according to Citigroup Inc. The difference exceeded 20 basis points only twice in the 10 years through 2007 -- in 1998 and 2003."
"The gap enables the government-chartered companies to offset some of the credit losses on mortgages they own or guarantee and eases pressure on U.S. Treasury Secretary Henry Paulson to step in with a bailout. The companies, which profit from their $1.6 trillion of mortgage investments, have tumbled more than 85 percent this year in New York Stock Exchange trading as mortgage delinquencies grow and the cost of debt rises."
"``From Fannie and Freddie's perspective, there's actually better investments now,'' said Moshe Orenbuch, an analyst at Credit Suisse Group in New York, adding that their interest margin is likely to continue to widen. ``It's ironic.''"
"Congress created Fannie and Freddie to expand homeownership and provide market stability. They make money by buying mortgages from banks, funding their purchases with low-cost debt, and by guaranteeing home-loan securities."
"Washington-based Fannie said last month net interest income rose to $2.1 billion in the second quarter, from $1.7 billion in the first quarter. The company's profit on its investments expanded to 100 basis points from 82 basis points, according to Credit Suisse."
Freddie's net interest income jumped 92 percent to $1.5 billion. The annualized profit per dollar of investments rose to 80 basis points from 48 basis points.
"``They, at the increment, are very, very profitable,'' said Dan Fuss, vice chairman of Loomis Sayles & Co. in Boston and co- manager of the $17 billion Loomis Sayles Bond Fund. ``If they can continue to do anything close to business as usual, they are immensely profitable.''"
"``Our funding costs remain attractive, particularly based on the opportunities to purchase mortgage assets at attractive spreads,'' Freddie spokesman Michael Cosgrove said. A Fannie spokesman, Jason Lobo, declined to comment."
Fannie and Freddie shares fell this year and their borrowing costs rose amid concern they don't have enough capital to weather the biggest housing downturn since the Great Depression. The companies had $14.9 billion of losses in the past four quarters as late payments on mortgages rose to the highest on record.
Most in 10 Years
"Freddie on Aug. 19 sold $3 billion of five-year reference notes to yield 113 basis points more than similar-maturity Treasuries, the most in at least 10 years. Fannie sold $3.5 billion of three-year notes at a record spread of 122.5 basis points on Aug. 13."
The crisis of confidence prompted Paulson to draw up a rescue plan last month giving him authority to inject unlimited amounts of capital into the companies.
"Fannie and Freddie rose in Europe, extending yesterday's New York gains. Fannie climbed 7 cents, or 1.2 percent, to $5.69 by 10:41 a.m. in Frankfurt, while Freddie added 19 cents, or 4.8 percent, to $4.16."
"The mortgage companies led advances in the Standard & Poor's 500 Index yesterday as analysts said they have enough capital to last the year, with Fannie jumping 8.3 percent and Freddie surging 21 percent."
"While the difference between Fannie and Freddie's cost to borrow and the returns they get on new investments has widened, losses are depleting capital and causing the companies to rein in their purchases of securities."
"Both said they plan to limit growth to preserve capital, after boosting holdings by $115 billion in the first seven months of this year. Their reluctance to purchase is contributing to higher yields on mortgage assets."
"Fewer purchases by Fannie and Freddie means the companies' debt costs are having little influence on mortgage bond prices and home-loan rates, according to some analysts. Yields in the $4.5 trillion market for agency mortgage bonds, those issued by Fannie, Freddie and Ginnie Mae, guide rates on new home loans."
`Make a Difference'
"``It would make a difference if they were increasing their portfolios,'' said UBS AG mortgage analyst Laurie Goodman in New York, whose team was ranked No. 1 in a 2007 poll by Institutional Investor magazine for ``pass-through'' agency mortgage bonds."
"Fannie and Freddie's holdings are shrinking at a monthly rate of about $20 billion because of refinancings, home sales and borrower defaults, according to an Aug. 21 report from New York-based Citigroup analysts Scott Peng, Brad Henis, and Brett Rose. That money can be reinvested into higher yielding securities."
"That is one reason ``there is no pressing need'' for a bailout, they wrote in the report, titled ``All That Sound and Fury, Signifying Nothing New.''"
"The companies are also boosting fees to guarantee home-loan securities, off-balance-sheet obligations for which they don't need to borrow. Fannie plans on Oct. 1 it will double to 50 basis points an upfront ``adverse market delivery charge,'' introduced this year for every mortgage the company buys or guarantees."
To contact the reporter on this story: Jody Shenn in New York at firstname.lastname@example.org.
"Last Updated: August 27, 2008 04:49 EDT"
"Australian, N.Z. Dollars Rise as Investors Boost Carry Trades "
By Ron Harui and Tracy Withers
"Aug. 27 (Bloomberg) -- The Australian dollar climbed from its weakest level in 11 months and the New Zealand dollar rose from near a two-week low as U.S. and Asian stocks advanced, giving investors more confidence to buy higher-yielding assets."
"The currencies also snapped two days of losses versus the yen as analysts said Fannie Mae and Freddie Mac have enough capital to last the year, prompting funds to return to so-called carry trades. The Australian and New Zealand dollars gained as prices rose for the commodities the nations export, improving the outlook for the South Pacific economies."
"``Investors are probably showing appetite for high-yielding assets in Australia and New Zealand,'' said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. ``This demand seems to be bolstering the Aussie and the kiwi,'' he said, referring to the currencies by their nicknames."
"Australia's dollar advanced 0.9 percent to 85.87 U.S. cents as of 4:53 p.m. in Sydney, after dropping yesterday to 84.94 cents, the lowest since Sept. 20. The currency climbed 0.2 percent to 93.76 yen."
"New Zealand's dollar gained 1.7 percent to 70.20 U.S. cents. It touched 68.99 cents yesterday, the weakest since Aug. 13. The currency strengthened 1 percent to 76.64 yen."
"Benchmark interest rates are 7.25 percent in Australia and 8 percent in New Zealand, compared with 2 percent in the U.S. and 0.5 percent in Japan, making the South Pacific nations popular targets for carry trades."
"In carry trades, investors get funds in a country with low borrowing costs and invest in another with higher interest rates, earning the spread between the two. The risk is that currency market moves can erase those profits."
"Gold, Australia's third most-valuable commodity export gained for a second day, adding 0.3 percent. The UBS Bloomberg Constant Maturity Commodity Index rose 0.2 percent yesterday. Raw materials account for 60 percent of Australia's exports and sales of commodities such as lumber make up 70 percent of New Zealand's overseas shipments."
The New Zealand dollar was the best performer today of the 16 most-traded currencies against the yen as U.S. stocks rebounded from the largest drop in a month. The MSCI Asia Pacific Index gained 0.5 percent after the Standard & Poor's 500 Index yesterday strengthened 0.4 percent.
"``A recovery in U.S. stock markets helped underpin yen crosses and the New Zealand dollar rebounded off its lows,'' said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``The risks are skewed in favor of the currency extending its gains.''"
Demand for the New Zealand dollar was also bolstered after an ANZ National Bank Ltd. survey showed local companies were confident about their future sales and profits for the first time in six months.
"A net 4.7 percent of companies expect their sales will improve over the next 12 months from a net 8.2 percent expecting a decline in the July survey, according to the report released by ANZ National Bank in Wellington. The net figure subtracts the number of pessimists from the number of optimists."
"Australian government bonds gained for a second day. The yield on the 10-year note fell 3 basis points, or 0.03 percentage point, to 5.72 percent, according to data compiled by Bloomberg. The price of the 5.25 percent bond due March 2019 rose 0.259, or A$2.59 per A$1,000 face amount, to 96.339."
New Zealand government debt advanced for a third day with the yield on the benchmark 10-year note falling 2 basis points to 6.04 percent.
To contact the reporter on this story: Ron Harui in Singapore at email@example.com; Tracy Withers in Wellington at firstname.lastname@example.org.
"Last Updated: August 27, 2008 03:05 EDT"
Mexican Stocks Fall on Concern Consumer Spending Will Slow
By William Freebairn
"Aug. 26 (Bloomberg) -- Mexican stocks fell to the lowest in seven months, led by retailers, on concern the slowing economy and declines in worker remittances from the U.S. will reduce consumer spending."
"Retailers led the retreat after Merrill Lynch & Co. reduced its recommendation on Wal-Mart de Mexico SAB and Controladora Comercial Mexicana SAB to ``neutral'' from ``buy.'' Organizacion Soriana SAB, Mexico's second-largest retailer, fell the most on the Bolsa index."
"``There's a growing perception that the economy is slowing,'' said Rogelio Gallegos, who helps manage about $325 million at brokerage Actinver SA in Mexico City. ``People are sensing quarterly reports are going to be a little weak.''"
"Mexico's Bolsa index declined 1.3 percent to 26,071.46, the lowest since Jan. 21."
"Retail sales in June increased less than economists forecast, the national statistics agency said yesterday. Mexico's central bank said last week the economy grew 2.8 percent in the second quarter, trailing the average estimate of economists."
"Comercial Mexicana fell to the lowest in five months, sliding 4.2 percent to 27.30 pesos. Wal-Mart de Mexico declined 0.7 percent to 38.27 pesos."
"``Wages, employment, consumer confidence, remittances, consumer credit and inflation all appear to be trending poorly,'' Merrill analysts led by Robert Ford wrote."
"Soriana fell 6.2 percent to 33 pesos, the lowest in a month. Analysts said the integration of a purchased supermarket chain may reduce profit margins. HSBC Holdings Plc analyst Francisco Chevez gave an ``underweight'' rating to Soriana in new coverage."
To contact the reporter on this story: William Freebairn in Mexico City email@example.com
"Last Updated: August 26, 2008 17:12 EDT"
"Corn, Soybeans Advance as Dollar's Gain Stalls, Crude Oil Rises "
By Jae Hur
Aug. 27 (Bloomberg) -- Corn and soybeans rallied as a drop in the dollar boosted the appeal of U.S. supplies for overseas importers and rising energy costs increased demand prospects for biofuel. Wheat gained for the first time in four days.
"Futures rose as the dollar declined against the euro after rising as much as 1.2 percent yesterday to $1.4571, the strongest since Feb. 14. A stronger U.S. currency erodes the purchasing power of overseas buyers. Crude oil climbed as much as 0.9 percent after rising 1 percent yesterday."
"``The halt of the dollar's advance and rising crude oil prices helped grains and other commodities rebound,'' Nicholas Chung, senior manager of the commodity derivatives team at Korea Development Bank, said today from Seoul. ``For corn, it's also a technical correction after declining in the past three days.''"
"Corn for December delivery advanced as much as 10.5 cents, or 1.8 percent, to $6.045 a bushel in after-hours electronic trading on the Chicago Board of Trade and traded at $6.005 as of 3:00 p.m. in Singapore. The price has risen 70 percent in the past 12 months, reaching a record $7.9925 on June 27."
"Soybeans for November delivery added as much as 23.75 cents, or 1.8 percent, to $13.6825 a bushel and was at $13.5925 as of 3:01 p.m. in Singapore. Futures have gained 59 percent in the past year, reaching a record $16.3675 on July 3."
"Production of soybeans in Argentina and Brazil, which account for more than half the world's output of the oilseed, may be hurt this year by dry weather and a campaign to end farming on deforested Amazon land, said Thomas Mielke, an analyst at Oil World, a Hamburg-based forecaster."
"Parts of Argentina are facing the worst drought in 40 years, Mielke said yesterday. Planting in Brazil may be little changed as the government cuts aid to farmers who can't prove that their land was obtained legally."
"Reduced output in South America combined with a dry spell that is threatening crops in the U.S., the world's largest soybean grower, could drive global prices of the oilseed higher, said Mielke."
"In China, soybeans for January delivery on the Dalian Commodity Exchange rose as much as 2.9 percent on concerns dry weather in the biggest soybean-producing area may have damaged crops, reducing the harvest starting next month."
"Northeastern Heilongjiang got 45 percent less rain than average between Aug. 1 and Aug. 24, the China National Grain and Oils Information Center said. It's unclear if forecast rains in parts of the region today and tomorrow would offer relief, the center said. China is the world's top importer of the oilseed."
"Wheat for December delivery was up 6.25 cents, or 0.7 percent, at $8.6075 a bushel as of 3:02 p.m. Singapore time after trading between $8.52 and $8.65. The contract has gained 19 percent in the past year, reaching a record $13.495 on Feb. 27."
"Farmers in Argentina, the fourth-largest wheat exporter last year, may harvest 20 percent less wheat this year because of drought and a conflict over taxes, the Buenos Aires Cereals Exchange said."
"The crop may total 12.5 million metric tons, down from 15.6 million tons a year earlier, Eduardo Anchubidart, head of the exchange's forecasting department, said yesterday. The crop is harvested starting in December."
To contact the reporter on this story: Jae Hur in Singapore at firstname.lastname@example.org
"Last Updated: August 27, 2008 04:13 EDT"
"Australian Business Investment Probably Rose 2%, Survey Shows "
By Jacob Greber
"Aug. 27 (Bloomberg) -- Australian business investment probably rose as miners including Rio Tinto Group expanded to meet Chinese demand for iron ore, offsetting a slide in spending by companies that rely on domestic spending."
"Capital spending rose 2 percent in the three months to June 30 after falling 2.5 percent in first quarter, according to the median estimate of 23 economists surveyed by Bloomberg. Forecasts ranged from a gain of 6 percent to a 3.9 percent drop. The report will be released tomorrow at 11:30 a.m. in Sydney."
"A mining boom is helping offset weaker consumer spending that will probably prompt the central bank to cut borrowing costs next week for the first time in seven years. Spending may cool after business confidence in July held at the lowest level since 2001, stock markets tumbled and sales growth slowed at retailers such as Harvey Norman Holdings Ltd."
"``We expect the strength in business investment will continue to be concentrated in the mining sector,'' said Kieran Davies, chief economist at ABN Amro Australia Ltd. in Sydney."
Export income is forecast to surge after mining companies including Rio Tinto negotiated a price increase of as much as 97 percent for iron ore destined for China.
"``The Reserve Bank will watch the investment figures closely to monitor the extent to which tighter credit conditions have affected the outlook for investment spending in the year ahead,'' Davies said."
"The central bank may soon cut interest rates to avoid a ``deeper and more persistent'' economic slowdown, policy makers said in the minutes of their Aug. 5 meeting, released last week."
"Australia's $1 trillion economy expanded at the weakest pace in almost two years in the three months through March and growth is forecast to remain ``low'' in the second and third quarters, the central bank said last week. Figures for economic growth in the second quarter will be released on Sept. 3."
"The economy is slowing as consumers cut spending to offset the highest borrowing costs in 12 years and a surge in gasoline prices, forcing companies including Qantas Airways Ltd. and Ford Motor Co. to fire workers."
The nation's All Ordinaries Index of stocks has tumbled 21 percent this year.
"``Whilst we expect business investment plans to remain positive, the rate of growth will likely moderate over the course of the year as the high cost of debt and a slowing domestic economy weigh further on business sentiment,'' said Richard Gibbs, chief economist at Macquarie Group Ltd. in Sydney."
"A survey of more than 400 companies by National Australia Bank Ltd., published on Aug. 12, showed business confidence in July held at the lowest level since the 2001 terrorist attacks in the U.S."
"Investors forecast a 100 percent chance that central bank Governor Glenn Stevens will cut the benchmark lending rate to 7 percent from 7.25 percent on Sept. 2, according to a Credit Suisse Group index based on trading in interest-rate swaps."
"Policy makers last raised interest rates in March, adding to increases in February, November and last August."
The following table gives economists' estimates of the change in business capital expenditure in the second quarter from the previous three months:
High forecast 6.0%
Low forecast -3.9%
No. of forecasts 23
4Cast Ltd. 6.0%
AMP Capital 2.0%
ANZ Banking Group 1.5%
Ausbil Dexia -0.1%
BT Financial 1.0%
Commonwealth Bank 4.0%
Goldman Sachs 2.0%
ICAP Australia 3.0%
JPMorgan Chase 4.0%
Lehman Brothers 4.0%
Merrill Lynch 5.0%
National Australia Bank 2.0%
RBC Capital Markets -1.0%
St. George Bank 4.0%
Suncorp Banking 2.0%
TD Securities -1.6%
Reuters IFR 1.0%
Westpac Bank 2.0%
To contact the reporter for this story: Jacob Greber in Sydney at email@example.com
"Last Updated: August 26, 2008 10:01 EDT"
"Singapore Dollar to Rise 1.2% on Inflation, UBS Says (Update1) "
By Patricia Lui
"Aug. 27 (Bloomberg) -- Singapore's dollar will rise 1.2 percent in three months time to reach S$1.40 as persistent inflation prevents the central bank from stalling the currency's appreciation, UBS AG said."
"Singapore's inflation slowed in July by less than economists had estimated, after holding at 26-year highs in each of the three previous months. The trade ministry urged policy makers to maintain vigilance on inflation while ensuring the currency doesn't hurt exports by appreciating too sharply."
"``It remains too early for the central bank to contemplate a move to a neutral bias, much less an outright easing by shifting the policy band lower,'' New York-based analyst Benedikt Germanier wrote in a note yesterday. ``We do not rule out a more gradual appreciation at the October meeting.''"
"The city-state's currency traded at S$1.4170 per U.S. dollar at 11:50 a.m. local time, up 0.6 percent, according to data compiled by Bloomberg. It has declined 4 percent this quarter to be the worst performer among Asia's 10 most-active currencies on concern a slowing economy and shrinking exports will spur policy makers to support growth rather than tackle inflation."
The central bank conducts monetary policy by guiding the local dollar within an undisclosed band against a trade-weighted basket of currencies belonging to major trading partners.
"Investors should ``not be deceived'' by July's lower year- on-year July inflation which was ``driven primarily by the base effect from the 2 percentage point GST hike in July 2007,'' the UBS note read, adding that price pressures is ``best judged'' by the month-on-month number which was the highest since January."
"Consumer prices rose 6.5 percent last month from a year earlier, compared with 7.5 percent in each of the previous three months, the government said Aug. 25. Economists had expected a 6.1 percent increase, according to a Bloomberg survey. On a month-on-month basis, consumer prices rose 1.2 percent, after declining 0.3 percent during June."
UBS also said comments from the trade ministry following the release of the July inflation which urged policy makers to curb inflation.
The Monetary Authority of Singapore allowed a faster pace of appreciation in October 2007 and announced a one-off strengthening at its last policy meeting in April to rein in inflation. It holds its next biannual policy review in October.
Singapore's government this month cut its 2008 growth and export forecasts and warned of a ``bumpy year ahead.''
"The economy may grow at the lower end of the government's 4 percent-to-5 percent forecast range this year, Trade and Industry Minister Lim Hng Kiang said yesterday. Singapore recognizes the risk of very low growth or recessionary conditions globally in the future, he said."
To contact the reporter on this story: Patricia Lui in Singapore at firstname.lastname@example.org
"Last Updated: August 27, 2008 00:10 EDT"
Vietnam Cuts Fuel Prices to Ease Inflation From 28.3% (Update2)
By Nguyen Kieu Giang
Aug. 27 (Bloomberg) -- Vietnam lowered gasoline prices for a second time this month to ease Asia's fastest inflation after crude oil declined.
"The Southeast Asian nation cut the price of the most commonly used grade of gasoline to 17,000 dong ($1) a liter from 18,000 dong to ``reduce the cost of production and reflect the price globally,'' Deputy Minister of Finance Tran Xuan Ha said today in Hanoi. The new prices are effective immediately."
"``The move is good as it reflects the recent drop in international prices,'' said Hoang Thach Lan, chief analyst at Ho Chi Minh City-based SME Securities Co. ``It has boosted trading volume in the stock market today.''"
"The reduction may add to investor expectations that Vietnam's inflation is close to peaking at 28.3 percent. The benchmark stock index is poised for the biggest monthly gain since January 2007, recouping more than a third of its losses this year."
"The VN Index gained 0.03 percent to close at 561.85, the highest since March 20. The measure has gained more than 24 percent this month, the world's best performing, after the government reduced fuel prices and widened the daily trading limit for stocks."
"The government today also lowered kerosene prices to 18,000 dong from 19,000 dong, according to a joint statement by the ministries of finance and trade."
"Crude oil futures have fallen 21 percent from a record $147.27 a barrel on July 11. Contracts for October delivery rose as much as 85 cents, or 0.7 percent, to $117.12 a barrel on the New York Mercantile Exchange today."
"``If the international price falls below $100 per barrel, we will further reduce the domestic price,'' Ha said. Should oil decline below $110, Vietnam will introduce a 5 percent fuel import tax to cover losses for diesel companies, he said."
"Inflation quickened this month after the government in July raised fuel costs by about a third, a record amount. Even taking into account the first reduction on Aug. 14, prices of 92-RON gasoline are still about 17 percent higher."
"Gains in consumer prices accelerated from 27 percent in July. Prices in the category including transport led the index higher, rising 9.1 percent month-on-month after gains of 0.6 percent in July. From a year earlier, transport costs were up 25.6 percent, compared with 15.3 percent last month."
"Inflation may peak next month at about 29 percent and lose pace in coming months as the economy slows, JPMorgan Chase & Co. said after the figures were released. Gains in consumer prices will probably reach their height at 28.4 percent next month, according to HSBC Holdings Plc."
To contact the reporter on this story: Nguyen Kieu Giang in Hanoi at email@example.com
"Last Updated: August 27, 2008 01:29 EDT"
DA Office Rises to 4-Month High After Goldman Upgrade (Update1)
By Maki Jannetta
"Aug. 27 (Bloomberg) -- DA Office Investment Corp., a Japanese real estate investment trust, jumped to the highest in four months in Tokyo trading after Goldman Sachs Group Inc. raised it to ``neutral/neutral,'' saying default risk has abated."
"The shares climbed 5 percent to close at 445,000 yen on the Tokyo Stock Exchange, the highest since April 22."
"Goldman Sachs analyst Sachiko Okada yesterday lifted the stock from ``sell/neutral'' and raised its 12-month target price 7.9 percent to 410,000 yen."
"``We believe that default risks disappeared after the company announced its repayment of loans,'' Okada wrote in a Japanese-language report dated today."
DA Office Investment shares have fallen 39 percent this year compared with a 36 percent drop in the benchmark Tokyo Stock Exchange REIT Index.
To contact the reporters on the story: Maki Jannetta in Tokyo at firstname.lastname@example.org.
"Last Updated: August 27, 2008 03:44 EDT"
"China Stocks Fall for 5th Day; Offshore Oil, China Eastern Drop "
By Chua Kong Ho
"Aug. 27 (Bloomberg) -- China stocks fell for a fifth day, the longest losing streak in 10 weeks, as higher fuel and raw material costs pared earnings at industrial and transportation companies."
"Offshore Oil Engineering Co., which lays undersea pipes and tests oilfield equipment, plunged by the daily 10 percent limit for a second day after first-half profit slumped 33 percent on higher costs and bad weather. China Eastern Airlines Corp., the country's third-largest carrier, sank after reporting first-half profit fell 29 percent as it paid more for jet fuel. China Shipping Container Lines Co. slid after first-half earnings dropped 45 percent."
"``Many company profits will come under pressure because costs are not decreasing and the demand picture is deteriorating,'' said Chris Tang, chief investment officer at Marco Polo Pure Asset Management in Hong Kong, which oversees about $120 million."
"The CSI 300 Index, which tracks yuan-denominated shares on the nation's two exchanges, lost 6.24, or 0.3 percent, to 2,325.29 at the close, the lowest since Aug. 18. Nine of the 10 industry groups fell. The measure has retreated for the most consecutive days since a 10-day drop ending June 17."
"The stock benchmark has fallen 56 percent this year, the biggest decline among 89 global indexes tracked by Bloomberg, on concern government measures to combat inflation will erode profit."
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at email@example.com.
"Last Updated: August 27, 2008 03:56 EDT"
"Asian Currencies Gain, Led by Korean Won, on Intervention Signs "
By Aaron Pan and Kim Kyoungwha
"Aug. 27 (Bloomberg) -- Asian currencies rose, led by South Korea's won, after a finance ministry official said the government will act to stem a decline. The Philippine peso climbed before a central bank meeting tomorrow."
"Policy makers in Korea, concerned that a falling currency will raise the cost of imports, have spent billions of dollars in reserves to stem the won's loss. Nine of the 10-most active Asian currencies advanced today as the dollar weakened. Malaysia's ringgit gained after opposition leader Anwar Ibrahim won a seat in parliament in a local by-election."
"``Caution in Korea set in after the verbal intervention,'' said Chu In Young, a currency dealer with state-run Korea Development Bank in Seoul. ``Sales from offshore players who have heavily built up dollar positions were notable.''"
"The won rose 0.6 percent to 1,083.20 against the dollar as of 1 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The ringgit climbed 0.4 percent to 3.3763 and the peso gained 0.6 percent to 45.72."
The Korean won is the worst performing regional currency this year and in August. Central banks intervene by selling or buying foreign exchange.
"Korea's ``government cannot but worry about the recent won decline,'' Choi Jong Ku, director general of the ministry's international finance bureau, said at a briefing in Gwacheon today. ``We will continue to closely monitor the market status and take measures when needed.''"
The Philippine peso snapped a two-day loss as economists predict policy makers will increase the benchmark interest rate to a one-year high.
"The central bank will raise borrowing costs by at least 0.25 percentage point to 6 percent, according to all 15 economists surveyed by Bloomberg News. Governor Amando Tetangco said Aug. 5 that the bank will maintain a ``tight'' monetary policy after a report showed inflation accelerated to a 16-year high of 12.2 percent."
"Traders are ``lightening up their long-dollar positions ahead of the meeting,'' said Paul Joseph Garcia, chief investment officer at the Manila unit of ING Investment Management Ltd. who oversees $1.5 billion in funds. ``Everyone was caught long last time'' when the central bank unexpectedly raised its benchmark interest rate by 50 basis points last month."
An investor who is long purchases a currency seeking to benefit from its rise.
"The peso will likely trade between 45.60 and 46 for the remainder of the month, Garcia said."
"Singapore Dollar, UBS"
"Elsewhere, Indonesia's rupiah added 0.2 percent to 9,168 and Thailand's baht gained 0.3 percent to 34.15. Singapore's currency advanced 0.6 percent to S$1.4173 per U.S. dollar, according to data compiled by Bloomberg."
"Singapore's dollar will rise 1.2 percent in three months to reach S$1.40 as persistent inflation prevents the central bank from stalling the currency's appreciation, UBS AG said."
"Singapore's inflation slowed in July by less than economists had estimated, after holding at 26-year highs in each of the three previous months. The trade ministry urged policy makers to maintain vigilance on inflation while ensuring the currency doesn't hurt exports by appreciating too sharply."
"``It remains too early for the central bank to contemplate a move to a neutral bias, much less an outright easing by shifting the policy band lower, although we do not rule out a more gradual appreciation at the October meeting,'' New York-based analyst Benedikt Germanier wrote in a research note yesterday."
Malaysia's ringgit rose on speculation the currency's slump to a nine-month low this week was excessive as investor concern surrounding the by-election receded.
"The ringgit snapped a two-day loss as Anwar yesterday regained a seat in parliament after a 10-year hiatus, boosting his chances of ousting Prime Minister Abdullah Ahmad Badawi."
"``People are selling back dollars,'' said Awaluddin Shariff, a currency trader at EON Bank Bhd. in Kuala Lumpur. ``The way I see it, people are discounting the short-term risk premium now that the by-election is out of the way.''"
"The currency may rise as high as 3.3650 today, Awaluddin said."
Taiwan's dollar dropped for a third day on speculation a deepening global economic slump will hurt exports and prompt investors to dump more of the island's shares.
"The currency traded near a six-month low after reports yesterday showed business confidence in Germany, Europe's biggest economy, dropped to a three-year low and mortgage approvals in the U.K. held close to the lowest in 11 years."
Taiwan this week reported the slowest growth in export orders in five years and overseas investors were net sellers of the island's stocks on nine of the last 10 trading days.
"``Emerging markets are now the underdogs,'' said Dong Tao, chief Asia economist at Credit Suisse Group AG in Hong Kong. ``Export demand is slowing down, especially for Asian countries such as Taiwan.''"
"The currency fell 0.1 percent to NT$31.514 against the dollar, according to Taipei Forex Inc. It yesterday touched NT$31.571, the weakest since Feb. 21."
To contact the reporters on this story: Aaron Pan in Hong Kong at firstname.lastname@example.org; Kim Kyoungwha in Beijing at email@example.com.
"Last Updated: August 27, 2008 00:08 EDT"
Japan's Bonds Fall on Speculation BOJ Will Avoid Cutting Rates
By Theresa Barraclough
"Aug. 27 (Bloomberg) -- Japanese bonds fell, ending two days of gains, on speculation the Bank of Japan will hold off cutting interest rates due to signs inflation is accelerating."
"Consumer prices probably rose more than 2 percent in July from a year earlier, the fastest inflation in a decade, a government report in two days may show. Demand for debt also weakened before a Ministry of Finance sale of 1.7 trillion yen ($15.6 billion) in two-year notes tomorrow."
"``People don't think that the BOJ is going to ease, so the 10-year yield is resisting around the 1.4 percent level,'' said Keiko Onogi, a debt strategist in Tokyo at Daiwa Securities SMBC Co., one of the 26 primary dealers that are required to bid at government debt sales. ``I still believe that the next move by the BOJ is going to be a rate hike some time next year.''"
"The yield on the 1.5 percent bond due June 2018 rose 2.5 basis points to 1.44 percent as of 4:07 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price fell 0.217 yen to 100.515 yen. The yield declined to 1.405 percent on Aug. 25, the lowest since April 21."
"Ten-year bond futures for September delivery lost 0.41 to 138.08 as of the afternoon close at the Tokyo Stock Exchange. Two-year yields gained 2 basis points, or 0.02 percentage point, to 0.71 percent."
"There is a 7 percent chance the central bank will lower its target rate to 0.25 percent from 0.5 percent by year-end, according to calculations by JPMorgan Chase & Co. using interest-rate swaps. The odds were 10 percent yesterday."
"Japan's core prices, which exclude fresh food, climbed 2.3 percent in July from a year earlier after rising 1.9 percent in June, according to the median estimate of 38 economists surveyed by Bloomberg News before the Aug. 29 report."
"Bonds also declined on speculation the government will increase debt sales to finance additional spending aimed at helping the economy, which shrank in the second quarter. The government plans to determine the size of the stimulus package and how to fund it by the end of the week, Finance Minister Bunmei Ibuki said yesterday."
"``There still is the risk of increased issuance of bonds in the stimulus package, so investors are being cautious,'' said Maki Shimizu, a fixed-income analyst at UBS Securities Japan Ltd., also a primary dealer. ``It will put steepening pressure on the curve as increased bond issuance will loosen supply.''"
"Japanese Prime Minister Yasuo Fukuda wants to avoid issuing new bonds to fund extra spending, Ibuki announced yesterday."
"The difference in yield between five- and 20-year debt shrank to 1.12 percentage points, from 1.13 percentage points yesterday, the widest since April, according to data compiled by Bloomberg. A yield curve is a graph that charts the yields of bonds of the same quality with different maturities."
"Investors may purchase debt before the end of the month to match a change in a benchmark index they use to gauge performance, according to Nikko Citigroup Ltd., a Japanese unit of the world's biggest bank."
"``Thinking about the month-end extension trade, the longer- dated market will easily turn bullish,'' said Kazuhiko Sano, chief strategist at Nikko Citigroup in Tokyo. ``Given the good supply and demand conditions, the 10-year yield may try the 1.4 percent level.''"
"Nomura Securities Co. will increase the average duration of its Bond Performance Index by 0.16 year to 6.25 years in September, according to the company's Web site."
"Money managers such as Japan's Government Pension Investment Fund, which runs the world's largest pool of retirement wealth, use Nomura's index to help them decide their holdings. Duration is a gauge of how much a change in yields affects the price of a bond or debt portfolio."
Primary dealers may reduce bond holdings before tomorrow's two-year auction to protect themselves against potential losses.
"Investors ``may hedge-sell tomorrow morning,'' said Akitsugu Bandou, a senior strategist at Okasan Securities in Tokyo."
"The previous sale of the securities on July 29 drew bids for 3.30 times the amount on offer, compared with a so-called bid-to-cover ratio of 2.47 at the June sale."
To contact the reporter on this story: Theresa Barraclough in Tokyo at firstname.lastname@example.org.
"Last Updated: August 27, 2008 03:15 EDT"
Fed Officials Agree Next Rate Move Will Be Increase (Update3)
By Craig Torres
"Aug. 26 (Bloomberg) -- Federal Reserve officials agreed at their meeting this month that their next move in interest rates will be to raise them, while reaching no conclusion on the timing of such a decision, records of the gathering show."
"``Although members generally anticipated that the next policy move would likely be a tightening, the timing and extent of any change in policy stance would depend on evolving economic and financial developments,'' according to minutes of the Aug. 5 Federal Open Market Committee meeting released in Washington."
"The minutes today show a debate over the magnitude of the inflation threat, with two groups of officials making different judgments on the impact of the recent slide in commodity prices. Policy makers also diverged on whether financial turmoil continues to pose the risk of a more severe credit crunch."
"The Fed left its benchmark lending rate unchanged at 2 percent for the second straight meeting on Aug. 5. At the time, traders estimated a 31 percent chance of at least a quarter- point increase by the end of the year, futures prices show. Now, that probability is 22 percent."
"``There is a big split on the FOMC, no doubt about that,'' said Lyle Gramley, a former Fed governor and senior economic adviser at Stanford Group Co. in Washington. ``We know there is a severe credit crunch, but it is difficult outside the housing market to pin down how much impact it is having on the economy.''"
Today's release also showed that Philadelphia Fed President Charles Plosser opposed creating a new program offering investment banks options on borrowing Treasuries from the central bank.
"``Many participants noted that the financial system remained fragile, with some expressing continued concern about the possibility of an adverse feedback loop'' where tighter credit conditions push the housing market even lower, the minutes said. ``Several other participants suggested that the risks to the financial system had receded.''"
"With market instability triggering a rise in borrowing costs for households and businesses, ``most members did not see the current stance of policy as particularly accommodative,'' the minutes said."
"Chairman Ben S. Bernanke said the Fed ``is committed to achieving medium-term price stability and will act as necessary to obtain that objective'' in his remarks opening the Jackson Hole, Wyoming, monetary conference on Aug. 22."
"``A number of participants worried about the possibility that core inflation might fail to moderate next year unless the stance of monetary policy was tightened sooner than currently anticipated by financial markets,'' the minutes said."
"With the economy faltering, U.S. central bankers are trying to reconcile both aspects of their dual mandate to limit inflation while sustaining economic growth that maximizes employment."
"The Fed staff ``marked down'' its forecast for gross domestic product growth for the second half of 2008 and for 2009, the minutes said. Prices, minus food and energy, were ``expected to pick up somewhat in the second half of the year.''"
"Some 463,000 Americans have lost jobs since January as the worst housing recession in a quarter century has curtailed spending and bank lending. Economists expect annualized rates of growth of just 1.2 percent in the third quarter and 0.45 percent in the fourth quarter, according to the median estimate in a Bloomberg Survey."
"The consumer price index rose 5.6 percent for the 12 months ending in July. The Fed's preferred benchmark, the 12-month change in the personal consumption expenditures price index, minus food and energy, has been at 2 percent or higher since March 2004. Adjusted for the core PCE rate, the real federal funds rate is slightly below zero, the lowest since November 2004."
"``Inflation has not been coming down and this language about expecting inflation to moderate has been in the statement for two years now and it hasn't happened,'' said William Poole, former president of the St. Louis Fed. ``But it hasn't gotten enough worse to swing the central part of the committee to act.''"
"``Heightened investor apprehension about the viability of Fannie Mae and Freddie Mac had eased following legislative action, but pressures on these firms continued,'' the minutes said."
"The U.S. Treasury now has authority to provide any necessary financial support for the firms, making access to Fed loans less urgent. Still, shares of the mortgage finance companies are lower as investors conclude that government involvement would come at a cost to equity investors."
"Shares of Washington-based Fannie Mae have fallen 86 percent this year, while McLean, Virginia-based Freddie Mac has declined 88 percent."
"Housing markets remain weak. Some 4.67 million houses and condos were on sale in July, according to the National Association of Realtors. The 11.2 months supply, measured by the current sales pace, matches a prior record."
"A five- to six-month supply usually marks a stable market, according to the association. The glut of unsold homes pushed the median sales price down 7.1 percent last month compared with July 2007."
"Dallas Federal Reserve Bank President Richard Fisher dissented at the August meeting, preferring an increase in rates."
"Fisher ``dissented because he favored an increase in the target federal funds rate to help restrain inflation,'' the minutes said."
"Futures markets show a 92 percent probability of no change in interest rates when the FOMC next meets Sept. 16., and an 83 percent chance of no change at the October 28-29 meeting."
To contact the reporter on this story: Craig Torres in Washington at email@example.com
"Last Updated: August 26, 2008 16:57 EDT"
"Spain's Economy Grows the Least in 15 Years on Housing, Oil "
By Ben Sills
Aug. 27 (Bloomberg) -- Spain's economy grew at the slowest pace in 15 years in the second quarter as record oil prices and a housing slump edged the country toward a recession.
"Economic growth slowed to 0.1 percent from 0.3 percent in the first quarter, the Madrid-based National Statistics Institute said today in a statement. That confirmed the institute's initial estimate published on Aug. 14. From a year earlier the economy grew 1.8 percent, the slowest since 1996."
"The slowdown in construction is spreading through the rest of Spain's economy, with surveys showing manufacturing and services industries both contracted for a seventh month in July. Unemployment jumped to a three-year high in the second quarter, while house prices fell for the first time in a decade and building permits plunged by more than half in May from a year earlier."
"``Growth will be practically flat through the first half of next year,'' Ivan Barbacid, a strategist at Barclays Fondos in Madrid, said before the release."
Household spending from a year earlier slowed to 1.2 percent from 2.2 percent in the first quarter and construction investment fell 2.4 percent after a 0.3 percent increase in the first three month. Government spending accelerated to 3.8 percent from 3.6 percent.
Prime Minister Jose Luis Rodriguez Zapatero's government this month approved additional measures to steer annual growth back to about 3 percent by 2010. The government pledged 20 billion euros of financing for small businesses and families buying public housing in 2009 and 2010. That followed an 18 billion-euro package announced in April for this year and next.
"The euro-region economy contracted 0.2 percent in the second quarter, shrinking for the first time since the start of the single currency, the European Union statistics office in Luxembourg said today. The German, French and Italian economies, the three largest in the euro zone, also shrank."
"European Central Bank President Jean-Claude Trichet said on Aug. 7 that growth in the euro zone would be ``particularly weak'' through the third quarter, even as the Frankfurt-based bank held its benchmark interest rate at a seven-year high to tame price rises."
"Banco Bilbao Vizcaya Argentaria SA, Spain's second-biggest bank, posted a 19 percent fall in second quarter profit as loan defaults surged while Vodafone Plc, the world's largest mobile phone company, posted its biggest decline in 20 years last month after saying Spain's slowdown would curb profit."
To contact the reporter on this story: Ben Sills in Madrid at firstname.lastname@example.org
"Last Updated: August 27, 2008 03:03 EDT"
Crude Oil Rises a Third Day on Storm Threat in Gulf of Mexico
By Grant Smith and Christian Schmollinger
"Aug. 27 (Bloomberg) -- Crude Oil rose for a third day on forecasts Tropical Storm Gustav will strengthen as it enters the Gulf of Mexico, home to more than a fifth of U.S. production."
"Gustav is expected to return to hurricane status before reaching Gulf platforms, according to Jim Rouiller, a senior energy meteorologist with Wayne, Pennsylvania-based Planalytics Inc., a forecaster whose clients include oil companies. The dollar fell from a six-month high against the euro, bolstering the appeal of commodity investments as a hedge."
"``The threat of storms like Gustav will prevent oil prices falling further, so we see the market supported above $110 until the end of the hurricane season,'' said Ingrid Angermann, an economist at Dresdner Bank AG in Frankfurt."
"Crude oil for October delivery rose as much as $1.01, or 0.9 percent, to $117.28 a barrel on the New York Mercantile Exchange. It was trading at $116.98 at 9:14 a.m. London time. Prices are up 62 percent from a year ago."
"Futures have dropped 21 percent from a record $147.27 a barrel reached on July 11. Yesterday, oil rose $1.16, or 1 percent, to settle at $116.27 a barrel."
"Prices aren't likely to return to levels seen a few years ago, said today."
"``Prices are unlikely to return to levels of a few years ago anytime soon,'' International Energy Agency Executive Director Nobuo Tanaka said today at an oil conference in Stavanger, Norway. Oil market fundamentals may ease in the second half of this year and early next year, Tanaka added."
"Gustav was about 80 miles (125 kilometers) west of the Haitian capital, Port-au-Prince, and forecast to head into the central Gulf of Mexico by Aug. 31, the National Hurricane Center said in an advisory at 2 a.m. Miami time."
Category 4 Hurricane
"Gustav has the potential to grow to a Category 4 hurricane, the second-strongest grade with winds of at least 131 miles per hour, by the time it enters the U.S. Gulf, Planalytics's Rouiller said."
"Transocean Inc., the world's largest offshore oil driller, started suspending operations yesterday in advance of the storm's arrival. Royal Dutch Shell Plc began making arrangements to remove non-essential staff."
U.S. crude oil and fuel production plunged and prices rose to records when hurricanes Katrina and Rita shut refineries and platforms as they struck the Gulf of Mexico coast in August and September 2005.
"The dollar declined to $1.4685 per euro at 8:14 a.m. in London from $1.4653 in New York yesterday, when it touched $1.4571, the strongest since Feb. 14."
"Brent crude oil for October settlement rose as much as 87 cents, or 0.8 percent, to $115.50 a barrel on London's ICE Futures Europe exchange. It was at $115.25 a barrel at 9:15 a.m. London time."
To contact the reporter on this story: Grant Smith in London at email@example.com; Christian Schmollinger in Singapore at firstname.lastname@example.org.
"Last Updated: August 27, 2008 04:42 EDT"
"Polish Central Bank Will Keep Rates Unchanged, Survey Shows "
By Monika Rozlal
"Aug. 27 (Bloomberg) -- Poland's central bank will keep its benchmark interest rate unchanged for a second month as it assesses whether 8 increases in the past 16 months were enough to keep inflation at bay, a survey of economists shows."
"The Narodowy Bank Polski in Warsaw will leave its seven-day reference rate unchanged at 6 percent, according to all 17 economists in a Bloomberg survey. A decision will be announced at about noon local time today."
"Central bankers are already weighing industrial output and retail sales reports that suggested economic growth is slowing, easing pressure on consumer prices. The statistics office may report on Aug. 29 that gross domestic product expanded an annual 5.6 percent in the second quarter, the weakest pace since the end of 2005, according to the median forecast of 10 economists."
"``The Monetary Policy Council may prefer to wait and assess the effects of previous hikes, the pace of the zloty's strengthening and the global economic situation,'' said Ryszard Petru, the chief economist at Bank BPH in Warsaw. ``It doesn't mean, though, that no hikes should be expected in the future because inflationary risks related to fast wage growth are still relevant.''"
"Central banker Jan Czekaj said that statistical reports of economic developments through August won't be enough for policy makers to make a decision, though the latest report on wages, which have been growing by more than 10 percent almost each month in the past year, support an increase."
"Rate setters have been struggling for 10 months to bring the inflation rate, close to a 7-year high of 4.8 percent in July, down to its 2.5 percent target. Inflation has sped up because of rising global fuel and food prices and consumer demand."
"``Central bankers are likely to await the August peak inflation figure as well as the second-quarter GDP data before making the next move,'' said Jaroslaw Janecki, the chief economist at Societe Generale in Warsaw."
"Janecki said July's inflation rate and an expected 5 percent rate for August, along with double-digit wage growth and lower productivity, ``set the tone for future rate hikes.''"
"Still, rate setter Andrzej Wojtyna said the central bank shouldn't delay higher rates because the economy is unlikely to slow significantly and there are no signs of a cooling in the labor market."
"Industrial output rose at a slower pace for a second month in July after the zloty's strength hurt exports, while accelerating inflation curbs demand. The Finance Ministry reiterated a 5.5 percent economic growth forecast for this year."
"Post rate-decision statements by the central bank ``won't be less hawkish than they were a month ago,'' said Maciej Reluga, the chief economist at Bank Zachodni WBK in Warsaw. Reluga expects at least one more interest rate increase this year, with the first one to come no earlier than in September."
To contact the reporter on this story: Monika Rozlal in Warsaw at email@example.com.
"Last Updated: August 27, 2008 01:00 EDT"
"U.S. Economy: Confidence Up, House-Price Drop Slows (Update1) "
By Timothy R. Homan and Courtney Schlisserman
Aug. 26 (Bloomberg) -- Confidence among American consumers improved in August for a second month as the surge in gasoline prices and the slide in home values abated.
"The Conference Board's confidence index rose to 56.9, higher than economists had forecast. House prices in 20 major cities declined at a slower pace for the fourth straight month in June, the S&P/Case-Shiller index showed. The Commerce Department said new-home sales reached a three-month high in July."
"``A little bit of the gloom is lifting,'' said Peter Kretzmer, a senior economist at Bank of America Corp. in New York who previously worked at both the Federal Reserve Bank of New York and the Fed Board in Washington."
"Today's housing figures add evidence that the drag on the economy from the industry's slump is lessening, while officials and analysts predict that a rebound remains at least a year away. The improvement in confidence from June, when it reached a 16- year low, eases concern that spending will collapse."
"By contrast with the U.S. report, figures today from Germany showed that business and consumer confidence in Europe's largest economy fell more than forecast. The dollar climbed to its highest level since February."
"Treasuries, which had fallen earlier in the day, were little changed, with benchmark 10-year note yields at 3.78 percent at 4:28 p.m. in New York, compared with 3.79 percent late yesterday. The Standard & Poor's 500 Stock Index gained 0.4 percent to close at 1,271.51. The S&P Supercomposite Homebuilding Index fell 1.9 percent to 273.93."
"The S&P/Case-Shiller's measure of prices in 20 metropolitan areas fell 0.5 percent from the previous month, with nine areas reporting a gain compared with seven in May. Prices were down 15.9 percent from the previous year, less than economists had projected."
"``We have cities that have been up three months in a row, including Boston,'' Karl Case, co-founder of the index and a professor at Wellesley College, said in a Bloomberg Television interview. ``The last three months are encouraging to me.''"
The median of 26 forecasts in a Bloomberg News survey was for a 16.2 percent drop in the 20-city index from a year earlier.
"S&P/Case-Shiller also released quarterly figures for nationwide home prices. That measure showed a 2.3 percent drop in the three months through June from the previous three months, compared with a 6.8 percent decline in the first quarter."
"Government figures showed that house prices were unchanged in June from the previous month, after a 0.4 percent decline. For the second quarter, values depreciated 1.4 percent after falling 1.7 percent."
Plans to Buy
Past declines in house prices may be spurring higher demand. The Conference Board said more consumers plan to purchase a house in the next six months than any time since March.
"``While there is no national turnaround in residential real estate prices, it is possible that we are a seeing some regions struggling to come back, which has resulted in some moderation of price declines at the national level,'' David Blitzer, chairman of the index committee at S&P, said in a statement."
"Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Case created the home-price index based on research from the 1980s."
"Other reports show price declines continue. The National Association of Realtors said yesterday that the median price of an existing home fell 7.1 percent in July from a year earlier, compared with a 6.1 percent drop in June."
"The Realtors group also said that resales increased from a 10-year low and the supply of unsold homes rose. There was a record 4.67 million unsold houses and condos on the market in July, representing 11.2 months' supply at the current sales pace, matching the highest rate ever."
"The Commerce Department said sales of new homes rose to an annual pace of 515,000 in July, from 503,000 in June."
The price gauges from Commerce and the Realtors group can be influenced by changes in the regional composition or types of homes sold. Purchases in areas with more expensive homes relative to cheaper properties will bias the figures up.
"In contrast, the S&P/Case-Shiller index, and another by the Office of Federal Housing Enterprise Oversight, track the same house over time and more accurately reflect price trends, economists said."
Some companies are already seeing a pickup in interest because of lower prices.
"``Buyers are coming back into the market,'' Tom McCormick, president of Astoria Homes, said in a Bloomberg Television interview last week. ``Remarkably low'' prices do ``seem to be bringing people in off the sidelines.''"
"Even so, tight credit conditions and ongoing declines in residential construction will weigh on economic growth in coming months, Fed policy makers said at their Aug. 5 meeting. The Fed's quarterly survey of bank loan officers showed 75 percent had made it tougher for prime borrowers to get a mortgage, more than in the April survey."
To contact the reporter on this story: Timothy R. Homan in Washington at firstname.lastname@example.orgCourtney Schlisserman in Washington email@example.com
"Last Updated: August 26, 2008 16:32 EDT"
Australian Credit Swaps Victimized by U.S. Losses: Chart of Day
By Laura Cochrane and Oliver Biggadike
"Aug. 27 (Bloomberg) -- Australia isn't as risky as credit- default swaps would have you believe. The nation's corporate debt has been ``victimized'' by the U.S. housing crisis, according to David Verschoor of BNP Paribas SA."
The CHART OF THE DAY shows Australia's benchmark for default protection has been more expensive than similar contracts in the U.S. for almost half the trading days this year. Australia's Markit iTraxx exceeded the CDX North America Investment Grade index for less than two months in the previous three years. Higher prices indicate lower ability to repay debt.
"``It's hard to see why Australia is so high comparative to the U.S. when, with the exception of a handful of names, the market has never been in better shape and domestic bank profits are still healthy,'' said Verschoor, a credit trader at BNP Paribas in Hong Kong. Investors will realize ``they are too short Australia when the problems are in the U.S.,'' he said."
"Verschoor from BNP Paribas predicts the spread will narrow and become negative. Investors bought protection on the index, which includes the nation's banks, even as loss provisions at Australia's financial institutions trail the $504 billion of global bank and brokerage writedowns."
"Australia's 17 consecutive years of economic expansion, driven by demand for the nation's coal, iron ore and wool, helped boost company earnings and kept corporate default-protection costs below those for U.S. companies. Demand for commodities has driven unemployment to close to the lowest in more than three decades."
"Australia's benchmark was unchanged at 159 basis points today, Citigroup Inc. prices show, bringing the extra cost versus the U.S. to about 15 basis points."
To contact the reporters on this story: Laura Cochrane in Melbourne firstname.lastname@example.org; Oliver Biggadike in Tokyo at email@example.com.
"Last Updated: August 26, 2008 21:32 EDT"
Brazil's Real Advances on Climb in U.S. Consumer Confidence
By Adriana Brasileiro
"Aug. 26 (Bloomberg) -- Brazil's real advanced after consumer confidence rose in the U.S., the biggest buyer of Brazilian exports, in August."
"The real climbed 0.1 percent to 1.6288 per U.S. dollar at 4:53 p.m. New York time, after most trading in Brazil had ended. Earlier, the real fell as much as 0.9 percent to 1.6450 per dollar as prices of metals and agricultural commodities weakened."
"``The market is very volatile, tracking commodities and the U.S. market,'' said Reginaldo Galhardo, currency trading manager at Treviso Corretora de Cambio, a brokerage in Sao Paulo."
"Crude oil rose more than $1 a barrel on forecasts that Hurricane Gustav may enter the Gulf of Mexico, home to more than a fifth of U.S. oil production. Crude oil is among Brazil's top three exports with iron ore and soybeans."
"In the U.S., the Conference Board's confidence index jumped to 56.9, higher than economists had forecast, on easing gasoline prices. House prices in 20 major cities fell at a slower pace for the fourth straight month in June, the S&P/Case-Shiller index showed. The Commerce Department said new-home sales reached a three-month high in July."
"The yield on Brazil's zero-coupon bonds due in January 2010 fell 5 basis points, or 0.05 percentage point, to 14.79 percent, according to Banco Votorantim."
To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at firstname.lastname@example.org
"Last Updated: August 26, 2008 17:22 EDT"
"Brazil, Mexico: Latin America Local Bond and Currency Preview "
By Valerie Rota
Aug. 27 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from the previous session.
"Brazil: The IGP-M price index, the country's broadest measure of consumer, construction and wholesale prices, fell 0.2 percent in August after rising 1.76 percent in July, according to the median forecast of 28 economists surveyed by Bloomberg."
The Getulio Vargas Foundation is slated to publish the price report at 7 a.m. New York time.
The real rose 0.1 percent to 1.6288 per dollar.
"The yield on the country's zero-coupon bonds due January 2010 fell 5 basis points, or 0.05 percentage point, to 14.79 percent, according to Banco Votorantim SA."
"Mexico: The economy expanded 7.8 percent in the second quarter after growing 9 percent in the first quarter, according to the median estimate of seven economists surveyed by Bloomberg."
The national statistics agency is slated to release the report at 3:30 p.m. New York time.
The peso fell 0.2 percent to 10.1582 per dollar.
"The yield on Mexico's benchmark 10 percent bonds due December 2024 rose 4 basis points to 8.59 percent, according to Banco Santander SA."
To contact the reporter on this story: Valerie Rota in Mexico City at email@example.com.
"Last Updated: August 27, 2008 00:02 EDT"
Nordic Currencies: Norway's Krone Gains Before Jobless Figures
By Bo Nielsen
"Aug. 27 (Bloomberg) -- Norway's krone gained versus the dollar, snapping three days of declines, before data that will probably show the country's jobless rate held close to the lowest level in two decades in June."
"The Norwegian krone climbed to 5.3935 at 9:18 a.m. in Oslo from 5.4143 yesterday and traded at 7.9251 per euro, from 7.9346."
"Norwegian unemployment held at 2.5 percent in June, a report from Statistics Norway will show, according to the median estimate of 15 economists in a Bloomberg survey. The report will be released at 10 a.m. in Oslo."
"Sweden's krona rose against the dollar, ending a three-day decline, after a report showed August consumer confidence rose in August from a 13-year low. The Swedish krona rose to 6.3675 per dollar from 6.4003 yesterday. It was little changed at 9.3790 per euro."
"The consumer confidence index increased to minus 16.5 from minus 18.2 in July, the Stockholm-based National Institute of Economic Research said on its Web site today. The gauge was expected to rise to minus 17, according to the median estimate of 13 economists in a Bloomberg survey. The manufacturing confidence index fell to minus 12 in August from minus 11 in July."
"In other trading, Iceland's krona rose to 82.69 per dollar, from 82.89 yesterday, before data that may show consumer prices increased 14.6 percent in the year ended August, from 13.6 percent in July, according to a Bloomberg survey. The report will be released at 9 a.m. in Reykjavik."
"Nordic government bonds were mixed, with the yield on Sweden's 5.25 percent note due March 2011 falling 4 basis points, or 0.04 percentage point, to 4.24 percent. The yield on Norway's 6 percent government note maturing May 2011 rose 1 basis point to 5.013 percent. Yields move inversely to bond prices."
To contact the reporter on this story: Bo Nielsen in Copenhagen at firstname.lastname@example.org
"Last Updated: August 27, 2008 03:47 EDT"
"Gold Rises as the Dollar Falls Versus Euro, Crude Oil Advances "
By Feiwen Rong and Glenys Sim
Aug. 27 (Bloomberg) -- Gold rose for the second day in Asia as the dollar's decline from a six-month high against the euro and crude oil's advance boosted the appeal of the precious metal as an alternative asset.
"Gold is priced in dollars and often moves in the opposite direction to the U.S. currency, which fell for the first time in four days against the euro before a U.S. government report that economists forecast will show orders for durable goods stalled in July. Crude oil added more than $1 a barrel yesterday."
"``Hurricane worries pushed crude oil prices higher, prompting buying of bullion that more than offset selling related to the U.S. dollar rally,'' Darren Heathcote, head of trading at Investec Bank Ltd."
Bullion for immediate delivery gained 0.3 percent to $827.22 an ounce at 2:15 p.m. in Singapore. Silver for immediate delivery advanced 0.4 percent to $13.6475 an ounce.
The dollar fell from a six-month high against the euro on speculation weakening business and consumer spending will discourage the Federal Reserve from raising interest rates.
"The dollar declined to $1.4708 per euro from $1.4653 yesterday, when it touched $1.4571, the strongest since Feb. 14. Crude oil in New York rallied 0.3 percent to $116.65 a barrel after advancing 1 percent yesterday. Prices are up 61 percent from a year ago."
"Still, ``gold should fall, with last week's rebound looking like a relief rally before the onset of further declines,'' Mark Pervan, analyst at Australia and New Zealand Banking Group Ltd. in Melbourne, said in a report yesterday."
"``The U.S. dollar appears to be climbing higher with the market looking for more reasons to buy rather than sell the previously unloved currency,'' he said, adding that ``a choppy oil price may limit price declines'' in bullion."
"JPMorgan Securities Ltd., a unit of JPMorgan Chase & Co., lowered its price forecasts this year for gold and platinum, citing an improved outlook for the dollar and reduced inflation expectations."
"Gold may average $884 an ounce in 2008, London-based analyst Michael Jansen said in a report today, down 3.3 percent from an earlier forecast of $914 an ounce."
Gold for December delivery gained 0.6 at $832.80 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 2:12 p.m. in Singapore.
Bullion for December delivery on the Shanghai Futures Exchange jumped 1.4 percent at 184.80 yuan a gram ($839 an ounce).
"In Japan, gold for June delivery on the Tokyo Commodity Exchange added 0.9 percent to 2,918 yen a gram ($832 an ounce)."
To contact the reporters on this story: Feiwen Rong in Singapore at email@example.com; Glenys Sim in Singapore at firstname.lastname@example.org
"Last Updated: August 27, 2008 03:01 EDT"
Latin America Currencies: Chile's Peso Drops as Copper Slides
By Andrea Jaramillo and Drew Benson
"Aug. 26 (Bloomberg) -- Chile's peso fell to an almost two- month low as a decline in copper, the country's biggest export, slowed dollar inflows."
The peso also fell today as the U.S. dollar rallied against most major currencies.
"``Emerging markets have lost ground against the dollar in the past month,'' said Ricardo Gomez, head of fixed-income trading at Larrain Vial SA in Santiago. ``Lower copper prices have also hurt the peso amid expectations external accounts will deteriorate.''"
"Chile's currency weakened 0.2 percent to 522.91 per dollar at 5:23 p.m. New York time, from 522 yesterday. Earlier it touched 524.8, the lowest since July 1. The peso is down 6.1 percent in the past month."
Copper futures for December delivery declined 1.1 percent to $3.425 a pound on the Comex division of the New York Mercantile Exchange. Copper reached the all-time high of $4.2605 on May 5.
"Speculation the central bank will raise its overnight lending rate is helping limit peso losses, Gomez said."
"The currency touched its highest in more than a decade in March, buoyed by the widening difference between Chile's target lending rate and the 2 percent U.S. benchmark rate and gains in copper. The 5.75 percentage-point difference between Chilean and U.S. U.S. benchmark rates is the biggest since at least November 1998."
"Chilean policy makers lifted interest rates by a half- percentage point in each of the last two monthly meetings, and will probably carry out a quarter-point increase on the Sept. 4 meeting, according to the median estimate of six analysts in a Bloomberg survey."
"The peso has dropped 16 percent since April 14, when Banco Central de Chile began buying $50 million daily in the currency market in an effort to weaken the currency and bolster exports. The central bank has said it will purchase as much as $8 billion this year."
"The yield on the nation's peso bond due March 2013 rose 9 basis points, or 0.09 percentage point, to 9.05 percent, according to Chile's Commerce Exchange."
"Colombia's peso led declines in Latin America, sliding 0.7 percent to 1,891.60 per dollar, its weakest in a week, from 1,879.35 yesterday, according to the Colombian foreign-exchange electronic transactions system, known as SET-FX."
"``There is concern about slower economic growth,'' said Camilo Perez, head economic analyst with Banco de Bogota SA, the country's second-biggest bank. ``We don't think the central bank will raise rates again this year, and will then begin to cut them during the first quarter of next year.''"
Banco de la Republica last month lifted its overnight lending rate to a seven-year high of 10 percent. Policy makers have raised the key rate 16 times since April 2006.
"The yield on Colombia's benchmark 11 percent bonds due July 2020 declined 8 basis points, or 0.08 percentage point, to 11.47 percent. The bonds' price rose 0.491 centavo to 96.976 centavos per peso, according to Colombia's stock exchange."
"Peru's sol declined for a third day, declining 0.1 percent to 2.9398 per dollar, compared with 2.9365 yesterday. The yield on the nation's 8.6 percent sol-denominated bond due in August 2017 was unchanged at 8.03 percent, according to the local unit of Citigroup Inc."
"In Venezuela, the bolivar was unchanged at 3.65 per dollar in the black market, traders said."
The government pegs the currency at an official exchange rate of 2.15 per dollar under restrictions imposed in 2003. Venezuelans turn to the parallel market when they can't get government approval to buy dollars at the official rate.
"The yield on Argentina's inflation-linked peso bonds due in February 2033 fell 13 basis points to 9.91 percent, according to Citigroup Inc.'s unit in Argentina. The government spent $389 million during the past two weeks buying back shorter-duration bonds in a bid to bolster prices. It plans to hold auctions to buy back debt beginning this week."
Argentina's peso was little changed at 3.0266 per dollar from 3.0260 yesterday.
To contact the reporters on this story: Drew Benson in Buenos Aires at Abenson9@bloomberg.netAndrea Jaramillo in Bogota at email@example.com
"Last Updated: August 26, 2008 17:26 EDT"
European Bonds Little Changed; German Inflation Probably Slowed
Aug. 27 (Bloomberg) -- European 10-year bonds were little changed before a government report that may show inflation in Germany slowed in August as energy prices eased.
"The yield on the 10-year bund, which is most sensitive to inflation, held near the lowest level in almost three months before the report that will probably show consumer-price growth reached 3.4 percent from 3.5 percent in July, when measured using a harmonized European Union method, according to a Bloomberg survey."
"``The consumer price index for the whole of Germany is expected to show a decline,'' said Jens Peter Soerensen, chief bond analyst in Copenhagen at Danske Bank A/S. ``Inflation is likely to have peaked as commodity prices have leveled off. In the short run we may see some range trading before the next leg down in bond yields.''"
"The yield on the 10-year bund, Europe's benchmark government security, was little changed at 4.11 percent by 7:31 a.m. in London. The 4.25 percent note due July 2018 rose 0.02, or 20 euro cents per 1,000-euro ($1,471) face amount, to 101.08."
The yield on the two-year note rose 1 basis point to 3.99 percent. Yields move inversely to bond prices.
The German inflation data will be released later today by the Federal Statistics Office in Wiesbaden. Oil prices have retreated 20 percent from a record of $147.27 a barrel while a faltering economy makes it more difficult for companies to boost prices.
"Bonds rallied yesterday after a report showed business confidence in Germany fell to the lowest level in three years in August, increasing the likelihood the European Central Bank will lower interest rates. The German economy, Europe's largest, contracted in the second quarter, according to a separate report."
Policy makers left the main interest rate at 4.25 percent on Aug. 7 while ECB President Jean-Claude Trichet said that growth will be ``particularly weak.''
To contact the reporter on this story: Agnes Lovasz in London at firstname.lastname@example.org
Platinum Futures Gain as Dollar's Drop Spurs Investment Demand
By Dave McCombs
Aug. 27 (Bloomberg) -- Platinum futures in Tokyo advanced for a sixth day in seven as the dollar's drop from a six-month high against the euro and crude oil's gain boosted the appeal of the precious metal as an alternative asset.
"Platinum has added 11 percent since dropping to 4,555 yen a gram ($1,296 an ounce) Aug. 19, the lowest in a year. The most- traded contract on Aug. 22 capped its sixth weekly decline, the longest losing streak since Aug. 17, 2001."
"``Precious metals have also held most of their recent gains, a confirmation that the losses were overdone on the downside,'' John Reade, an analyst at UBS AG, said in a note to clients dated yesterday."
"June-delivery platinum jumped 0.6 percent to 5,036 yen a gram ($1,433 an ounce) at the 11 a.m. break on the Tokyo Commodity Exchange. Platinum for immediate delivery advanced $20 to $1,440 an ounce at 11:28 a.m. in Tokyo, a 1.4 percent gain from yesterday in New York."
The dollar today fell from a six-month high against the euro on speculation weakening business and consumer spending will discourage the Federal Reserve from raising interest rates.
"The U.S. currency dropped to $1.4699 per euro from $1.4653 yesterday, when it touched $1.4571, the strongest since Feb. 14."
"ZKB Platinum advanced to 71,889 ounces in the week ended Aug. 22, Zurich-based ZKB said Aug. 25 in an e-mailed report. That compares with 65,504 ounces for the previous week."
To contact the reporter for this story: Dave McCombs in Tokyo at email@example.com
"Last Updated: August 26, 2008 23:48 EDT"
Orders for Durable Goods in U.S. Probably Stalled in July
By Timothy R. Homan
"Aug. 27 (Bloomberg) -- Orders for U.S. durable goods probably stalled in July as elevated raw-material costs and slowing sales prompted companies to limit spending, economists said ahead of a government report today."
"Bookings for goods meant to last several years were unchanged after a gain of 0.8 percent in June, according to the median estimate in a Bloomberg News survey of 76 forecasters. Excluding transportation equipment, orders probably fell by the most in five months."
"The three-year housing slump and stricter lending rules may hurt demand even more in coming months after the effects of the federal tax rebates fade, raising the risk growth will slow. Economies abroad are also weakening, indicating companies will not be able to count on sustained gains in exports."
"``With domestic demand expected to slow sharply over the second half of the year, orders and investment spending will be weak,'' said Peter Kretzmer, a senior economist at Bank of America Corp. in New York."
The Commerce Department is scheduled to release its durable goods report at 8:30 a.m. in Washington. Projections in the Bloomberg survey ranged from a drop of 2.1 percent to an advance of 2.2 percent.
"Excluding transportation equipment, orders probably fell 0.7 percent, according to the survey median."
Other reports have indicated manufacturing has stagnated.
"The Institute for Supply Management said on Aug. 5 that its factory index fell to 50 in July, the dividing line between growth and contraction, from 50.2 a month earlier. During the 2001 recession the index averaged 43.5."
"Manufacturing has fared better than in past downturns, helped in part by a weak dollar that has boosted exports. Now, that expansion is in question as overseas growth falters."
"Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, the European Union said this month. Japan's economy also shrank in the period as consumers spent less and exports fell, the government said on Aug. 13."
"Manufacturing ``declined or remained weak in most districts,'' even as ``demand for exports remained generally high,'' the Federal Reserve said last month in its regional economic survey known as the Beige Book. Bank lending ``was generally reported to be restrained.''"
"Consumers are retrenching as their home equity declines and banks restrict lending. Sales at U.S. retailers fell in July for the first time in five months as demand for automobiles slumped, the Commerce Department reported this month."
"Economists surveyed by Bloomberg News earlier this month forecast the U.S. economy will grow in the last six months of the year at half the pace of the first two quarters. Household spending, which has risen every quarter since 1992, is projected to stall in the last three months of 2008."
"A slowdown in growth and spending may give companies even less incentive to invest or hire. Alcoa Inc., the world's third largest aluminum producer, said last week that it will lay off 300 employees in Texas starting Aug. 31. The cuts come as a result of ``uneconomical power prices,'' the New York-based company said in a statement."
Date of Release 08/27 08/27
Observation Period July July
Median 0.0% -0.7%
Average -0.1% -0.6%
High Forecast 2.2% 0.6%
Low Forecast -2.1% -2.9%
Number of Participants 76 43
Previous 0.8% 2.0%
4CAST Ltd. -1.0% -1.5%
Action Economics 0.0% -2.9%
AIG Investments 0.2% 0.6%
Aletti Gestielle SGR 0.5% ---
Argus Research Corp. 0.5% ---
Banc of America Securitie -0.3% ---
Bank of Tokyo- Mitsubishi 0.5% ---
Barclays Capital 0.3% ---
BBVA 0.1% 0.5%
BMO Capital Markets 0.1% -0.7%
BNP Paribas -0.4% ---
Briefing.com 0.5% ---
Calyon 0.7% 0.4%
CFC Group -0.2% -1.0%
CIBC World Markets 0.0% -0.7%
Citi 2.2% -0.3%
ClearView Economics 0.5% ---
Commerzbank AG -0.3% ---
Credit Suisse 0.2% -0.3%
Daiwa Securities America -1.0% ---
DekaBank 0.1% ---
Desjardins Group 0.1% ---
Deutsche Bank Securities 0.3% 0.5%
Deutsche Postbank AG 0.0% -0.7%
Dresdner Kleinwort -0.2% -1.0%
DZ Bank 0.2% -0.4%
First Trust Advisors 0.4% -1.3%
Fortis 0.0% ---
FTN Financial 0.2% 0.4%
Global Insight Inc. 0.0% ---
"Goldman, Sachs & Co. -1.0% ---"
H&R Block Financial Advis -0.5% -1.0%
HBOS Treasury Services 0.0% -0.6%
Helaba -0.5% -1.0%
High Frequency Economics -1.0% -1.0%
Horizon Investments -0.2% -0.3%
HSBC Markets 0.1% -0.4%
IDEAglobal -0.5% 0.3%
Informa Global Markets 0.1% ---
ING Financial Markets 0.0% -1.0%
Insight Economics -1.0% ---
Intesa-SanPaulo -0.5% -0.8%
J.P. Morgan Chase 0.6% -0.8%
Janney Montgomery Scott L 0.4% -0.7%
Landesbank Berlin -2.1% -1.0%
Landesbank BW 0.0% ---
Lehman Brothers -1.0% ---
Lloyds TSB 0.3% ---
Merk Investments 0.0% -0.6%
Merrill Lynch 0.5% -0.9%
Moody's Economy.com -0.5% -0.2%
Morgan Keegan & Co. -0.3% ---
Morgan Stanley & Co. 0.2% ---
National Bank Financial -0.1% -0.6%
Natixis 0.4% -1.0%
Newedge 0.3% -0.2%
Nomura Securities Intl. -1.3% -1.1%
Nord/LB -0.5% 0.3%
PNC Bank -0.1% ---
RBS Greenwich Capital -0.7% ---
"Ried, Thunberg & Co. -0.5% ---"
Schneider Trading Associa -1.7% -1.6%
Scotia Capital -0.1% -0.5%
Societe Generale 0.0% -0.5%
Stone & McCarthy Research 0.6% ---
TD Securities -0.5% -1.3%
Thomson Financial/IFR -0.3% 0.5%
Tullett Prebon 0.2% ---
UBS Securities LLC -1.0% -2.3%
Unicredit MIB 0.2% ---
University of Maryland 0.1% ---
Wachovia Corp. 0.2% -0.4%
Wells Fargo & Co. 0.0% ---
WestLB AG 0.1% ---
Westpac Banking Co. 0.5% ---
Wrightson Associates -0.5% ---
To contact the report on this story: Timothy R. Homan in Washington at firstname.lastname@example.org
"Last Updated: August 27, 2008 00:01 EDT"
Germany July Import and Export Prices: Summary (Table)
By Kristian Siedenburg
Aug. 27 (Bloomberg) -- Following is a summary of July import prices from the German Federal Statistics Office in Wiesbaden:
July June May April March Feb. Jan. Dec. Nov.
2008 2008 2008 2008 2008 2008 2008 2007 2007
Import prices MoM 0.6% 1.5% 2.4% 0.9% 0.4% 1.1% 0.8% -0.1% 0.7%
ex energy 0.6% 0.5% 0.6% 0.3% 0.0% 0.9% 0.9% 0.1% -0.4%
Export prices 0.5% 0.5% 0.4% 0.3% 0.2% 0.6% 0.7% 0.0% 0.0%
Import prices YoY 9.3% 8.9% 7.9% 5.7% 5.7% 5.9% 5.2% 3.7% 3.5%
ex energy 3.5% 2.5% 2.0% 1.5% 1.5% 1.6% 0.7% 0.1% -0.4%
Export prices 3.3% 2.7% 2.3% 2.2% 2.2% 2.2% 1.8% 1.3% 1.2%
Import prices 4.4% 3.7% 2.9% 2.2% 1.9% 1.6% 1.6% 1.3% 0.9%
ex energy 1.3% 1.1% 1.3% 1.6% 1.4% 0.8% 0.2% 0.0% -0.3%
Export prices 1.2% 1.0% 1.1% 1.2% 1.1% 0.7% 0.3% 0.1% 0.1%
July June May April March Feb. Jan. Dec. Nov.
2008 2008 2008 2008 2008 2008 2008 2007 2007
Import prices 118.8 118.1 116.3 113.6 112.6 112.1 110.9 110.0 110.1
ex energy 106.5 105.9 105.4 104.8 104.5 104.5 103.6 102.7 102.6
Export prices 110.4 109.8 109.2 108.8 108.5 108.3 107.7 107.0 107.0
NOTE: Index level based at 2000=100. Data is unadjusted for
seasonal influences. The three month change is calculated as
the average index level of the latest three months divided by
the average index level of the previous three months.
SOURCE: Statistisches Bundesamt (German Federal Statistical Office)
To contact the reporter on this story: Kristian Siedenburg in Budapest at email@example.com
"Last Updated: August 27, 2008 02:00 EDT"
"Treasuries Fall Before Record Two-Year Auction, Five-Year Sale "
By Wes Goodman
"Aug. 27 (Bloomberg) -- Treasuries declined before the government sells a record $32 billion of two-year notes today and $22 billion of five-year securities tomorrow, the biggest amount since 2003."
"Two-year notes yield 35 basis points more than the Federal Reserve's 2 percent target for overnight bank lending, a third of the spread available in June, raising speculation demand will wane among investors who expect the central bank to increase borrowing costs. Fed officials agreed at an Aug. 5 meeting that their next move will be to raise interest rates, while reaching no conclusion on the timing, central bank records show."
"``I don't think this level will attract many people,'' said Satoshi Okumoto, a general manager in Tokyo at Fukoku Mutual Life Insurance Co., with $52.2 billion in assets. ``We wouldn't like to participate in the auctions.''"
"The two-year note yield rose 2 basis points to 2.35 percent as of 7:43 a.m. in London, according to bond broker BGCantor Market Data. The price of the 2.75 percent security due in July 2010 fell 1/32, or 31 cents per $1,000 face amount, to 100 23/32. Ten-year notes dropped 6/32. A basis point is 0.01 percentage point."
Investors bid for 2.42 times the amount of debt on offer at the previous Treasury two-year sale on July 23. The average for the past 10 auctions is 2.38.
"U.S. government securities headed for a third monthly gain, driven by forecasts for slowing U.S. economic growth and a 20 percent decline in oil costs from July's all-time high."
"``The market will rally because you'll see inflation start drifting lower,'' said Felix Stephen, senior investment strategist at Advance Asset Management Ltd. in Sydney, whose International Fixed Interest bond fund returned 5.2 percent so far this year, beating 95 percent of its competitors. ``Oil has come down. This is going to be good for bonds.''"
"Inflation expectations have declined since the start of July, yields indicate. The difference between rates on 10-year Treasury Inflation Protected Securities, or TIPS, which reflects the outlook among traders for consumer prices, was 2.17 percentage points, near the narrowest spread since January."
The dollar fell from a six-month high against the euro and slid versus the yen before a government report that economists estimate will show orders U.S. durable goods failed to grow in July. The U.S. currency weakened to $1.4713 per euro from $1.4653 late yesterday in New York.
Durable Goods Orders
"Bookings for goods meant to last several years were unchanged, after a gain of 0.8 percent in June, according to the median estimate in a Bloomberg News survey of 76 economists before the Commerce Department report today. Excluding transportation equipment, orders probably fell by the most in five months."
"The U.S. economy may have expanded 2.7 percent in the second quarter, faster than the 1.9 percent pace first reported, a separate Bloomberg survey showed before the Commerce Department revises the figure tomorrow. Growth will slow to 0.45 percent in the fourth quarter, another survey showed."
"U.S. government securities returned 2.6 percent since the end of May, according to Merrill Lynch & Co.'s U.S. Treasury Master index. They are up 4 percent so far in 2008, versus 9.06 percent for all of 2007."
"Notes also slid as the MSCI Asia Pacific Index of regional shares rose 0.6 percent, its second gain in three days, eroding demand for the relative safety of government debt."
"Two-year yields will increase to 2.44 percent by year-end, according to a Bloomberg News survey of economists, with the most recent forecasts given the heaviest weightings."
"The central bank will probably increase its target for overnight bank lending by at least a quarter percentage point in January, futures contracts on the Chicago Board of Trade indicate."
To contact the reporter on this story: Wes Goodman in Singapore at firstname.lastname@example.org.
"Last Updated: August 27, 2008 03:02 EDT"
Dollar Falls on Speculation Reports to Show Flagging Spending
By Stanley White
Aug. 27 (Bloomberg) -- The dollar fell from a six-month high against the euro and dropped versus the yen on speculation weakening U.S. business and consumer spending will delay a Federal Reserve interest-rate increase.
The greenback retreated from a two-year high against the British pound as economists forecast U.S. data this week will show declines in durable goods orders and slowing consumption. The Australian dollar rebounded from an 11-month low as rising Asian stocks gave investors confidence to buy higher-yielding assets overseas.
"``The dollar still faces some risks of further declines,'' said Osamu Takashima, chief analyst for global market sales and trading in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan's largest publicly listed bank. ``The U.S. economy is sluggish and I don't expect the Fed to hike rates until April or May of next year.''"
"The dollar declined to $1.4685 per euro at 8:14 a.m. in London from $1.4653 in New York yesterday, when it touched $1.4571, the strongest since Feb. 14. The dollar fell to 109.23 yen from 109.60. The euro was at 160.43 yen from 160.64 yesterday. The dollar slid to $1.8409 versus the pound from $1.84. It rose yesterday to $1.8331, its highest since July 2006."
The U.S. currency rallied yesterday after German business confidence declined this month to the lowest level in three years and the minutes of the Fed's last meeting showed that while policy makers agreed that their next move will be a rate rise they didn't indicate the timing.
"Futures on the Chicago Board of Trade show a 22 percent chance that the Fed will increase its 2 percent target rate for overnight lending between banks by at least a quarter-percentage point at a Dec. 16 meeting, compared with 70 percent odds a month ago. Policy makers next meet Sept. 16"
"The Australian dollar bought 85.89 U.S. cents from 85.15 cents late yesterday in Asia, when it fell to 84.94, the lowest since Sept. 20. It gained to 93.81 yen from 93.54 yesterday as MSCI's Asia Pacific Index of regional shares rose 0.5 percent, encouraging so-called carry trades."
"In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the rates. The risk is that currency market moves can erase those profits."
"Australia's benchmark interest rate is 7.25 percent, compared with 0.5 percent in Japan."
Durable Goods Orders
"Bookings for U.S. goods made to last several years were unchanged in July, compared with a gain of 0.8 percent in June, according to a Bloomberg News survey of economists before a Commerce Department report at 8:30 a.m. today in Washington. A separate report on Aug. 29 may show personal spending rose 0.2 percent, less than half the 0.6 percent gain in June, according to a separate survey."
"``The prospects for the U.S. economy are still poor and it will continue to slow,'' said Katie Dean, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``There's not a lot of reasons to own dollars.''"
"Gains in the euro may be limited by speculation German inflation slowed this month, reducing pressure on the European Central Bank to raise borrowing costs."
"Germany's consumer prices rose 3.4 percent in August from a year earlier after a 3.5 percent increase in the previous month, according to a Bloomberg News survey. The report from the Federal Statistics Office is due today."
"The implied yield on the Euribor futures contract expiring in September 2009 fell 6 basis points, or 0.06 percentage point, to 4.32 percent. The yield averaged 18 basis points above the ECB's benchmark, currently 4.25 percent, from 1999 to August 2007."
"``The euro is mired in a mid-term downtrend,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``Slowing inflation is yet another reason why we can't expect the ECB to raise rates. Traders will continue to push the euro lower.''"
"The euro may fall to $1.4570 and 159.90 yen today, he said."
"The 15-nation euro was headed for a 5.7 percent decline versus the dollar this month, its biggest monthly drop since its 1999 debut. It has fallen 4.7 percent versus the yen in August, the most since a 5.8 percent drop in March 2004, as a report showed the European economy contracted last quarter."
"The dollar's declines against the euro, the yen and the pound accelerated on signs the Dollar Index is forming a double top on its chart, said Toru Tokoyoda, head of foreign-exchange sales in Tokyo at Lehman Brothers Holdings Inc."
A double top is when a security makes two successive peaks and often indicates the reversal of a trend. The distance between the peaks and the lowest point of the double top may indicate the next support level a security will fall to.
"The ICE futures exchange's Dollar Index, which compares the greenback against the currencies of six U.S. trading partners, was last at 76.880 from 77.251 yesterday. It rose to 77.413 on Aug. 19, fell to 76.022 on Aug. 21 and then rose yesterday to a second peak at 77.619."
"``The double top in the Dollar Index was a catalyst to push the dollar lower,'' Tokoyoda said. ``Some players are taking their cue from this chart formation.''"
"The dollar may fall to $1.4750 versus the euro today, he forecast."
To contact the reporter on this story: Stanley White in Tokyo at email@example.com
"Last Updated: August 27, 2008 03:23 EDT"
"Brazilian Stocks Fall, Led by Banks, Sabesp; Bolsa Declines "
By Alexander Ragir and William Freebairn
"Aug. 26 (Bloomberg) -- Brazilian stocks fell for a third day, as financial companies declined after Goldman Sachs Group Inc. said loan growth for the nation's biggest banks will slow in the second half of the year."
"Banco Bradesco SA and Banco Nossa Caixa SA led a drop in banks on concern the increase in interest rates over the past year will hurt demand for credit. Cia. de Saneamento Basico do Estado de Sao Paulo dropped after UBS AG said the utility may be better off giving dividends than buying Empresa Metropolitana de Aguas e Energia SA. Cia. Siderurgica Nacional SA rose, leading gains for steelmakers and limiting the Bovespa's decline, after UBS AG analysts upgraded the stock to ``buy.''"
"The Bovespa index dropped 118.55, or 0.2 percent, to 54,358.70. Thirty-four stocks fell on the index, while 32 rose. Mexico's Bolsa index declined 1.3 percent. Chile's Ipsa climbed 0.2 percent. The MSCI Latin America index slipped 0.5 percent."
Bradesco fell 2.1 percent to 29.08 reais. Nossa Caixa dropped 2.9 percent to 37.40 reais. Banco do Brasil SA slid 2.6 percent to 22.20 reais.
"``We project a deceleration of loan growth in the second half of 2008, and we would need to see more of a slowdown to meet our forecast,'' Goldman analysts said. They forecast 2008 loan growth of 26 percent in 2008 for banks including Banco do Brasil and Bradesco, down from 35 percent in June 2008 year-on-year."
A central bank report showed yesterday that Brazilian bank lending expanded last month at the slowest pace since February as rising interest rates made borrowing more expensive and damped the consumer spending that has driven growth to record levels.
"Sabesp, as the water and electricity utility owned by Sao Paulo state is known, fell 6.3 percent to 35.60 reais. Sabesp said in June it had entered a confidentiality agreement with the utility known as EMAE and was ``aiming at an eventual acquisition of assets.''"
"``Potential value destruction is limited but the deal raises concern on the use of cash and increases company's risk perception,'' wrote UBS analysts Rafael Espirito Santo, Pedro Batista and Eduardo Haiama in a note to clients."
"The Bovespa gained earlier in the day, led by steelmakers."
"CSN rose 1.1 percent to 54 reais. Gerdau SA, Latin America's biggest steelmaker, gained 0.7 percent to 29 reais."
"Current share prices ``imply steel prices as much as 35 percent lower than current, which we view as unlikely due to scarcity of new steel capacity, and tight raw material supply,'' the UBS analysts wrote."
"Mexico's Bolsa index slid to the lowest in seven months, led by retailers, on concern the slowing economy is hurting consumer spending."
"``There's a growing perception that the economy is slowing,'' said Rogelio Gallegos, who helps manage about $325 million at brokerage Actinver SA in Mexico City. ``People are sensing quarterly reports are going to be a little weak.''"
"Organizacion Soriana SAB, Mexico's second-largest retailer, fell the most since January as analysts said the integration of a purchased supermarket chain may reduce profit margins. HSBC Holdings Plc analyst Francisco Chevez gave an ``underweight'' rating to Soriana in new coverage."
"Grupo Famsa SAB, a retailer with stores in Mexico and the southern U.S., dropped the most in three weeks. Mexican retail sales rose less in June than economists forecast, signaling consumer spending may be slowing with the economy."
Soriana declined 6.2 percent to 33 pesos. Famsa fell 3.1 percent to 26.50 pesos.
"In other Latin America markets, Argentina's Merval rose 0.9 percent, Peru's Lima General jumped 2.1 percent and Colombia's IGBC slipped 0.1 percent."
To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at firstname.lastname@example.org; William Freebairn in Mexico City at email@example.com.
"Last Updated: August 26, 2008 16:53 EDT"
German July Import Prices Rise Most in Eight Years (Update1)
By Simone Meier
"Aug. 27 (Bloomberg) -- Import-price inflation in Germany, Europe's largest economy, accelerated to the fastest pace in almost eight years in July, led by surging energy costs."
"Prices rose 9.3 percent from a year earlier, the Federal Statistics Office in Wiesbaden said today. That's the biggest gain since November 2000. Economists expected an increase of 9.2 percent, the median of 15 forecasts in a Bloomberg News survey showed. In the month, prices rose 0.6 percent."
"Today's report is further evidence of pressure on inflation after producer prices rose the most since October 1981. Even though oil prices have retreated 20 percent from a record of $147.27 a barrel and a faltering economy makes it more difficult for companies to pass on higher costs, European Central Bank policy makers have warned that past commodity price increases will pose a risk to inflation in the months ahead."
"``Even though the worst may be over in terms of oil price increases it's certainly too early for the ECB to sit back and relax,'' said Kenneth Broux, an economist at Lloyds TSB Group Plc in London. ``The decreases will slow the pace of price rises but we're far from a level the ECB is comfortable with.''"
"German inflation probably slowed to 3.4 percent in August from 3.5 percent in the previous month, when measured using a harmonized European Union method, a Bloomberg survey shows, still well above the ECB's limit of just below 2 percent. The Federal Statistics Office will publish August inflation later today."
"Prices of gas rose 53.6 percent in the year and oil was 51.6 percent more expensive, today's report showed. The cost of coal increased 77.6 percent from July 2007. Excluding energy, import prices rose 3.5 percent in the year."
The cost of crude oil has increased 57 percent over the past year. The euro's 6.9 percent gain against the dollar over the same period has helped soften the impact of surging energy costs by making imports more affordable.
"ThyssenKrupp AG, Germany's largest steelmaker, on Aug. 14 raised its full-year earnings forecast as increasing demand from builders and automakers drove prices to a record. Chief Financial Officer Ulrich Middelmann said that day there were ``very few clients who rejected renegotiations'' on prices."
"In Germany, producer-price inflation accelerated more than economists forecast to 8.9 percent in July. Wholesale prices surged 9.9 percent in July, the most since November 1981."
"Slowing growth may not help push down inflation anytime soon, ECB council member Axel Weber said on Aug. 14, when citing ``upside risks'' to price stability. The Frankfurt-based central bank on Aug. 7 kept its key rate at 4.25 percent to fight inflation, which remained at 4 percent in July."
"``Inflation concerns are here to stay for a while,'' said David Kohl, deputy chief economist at Julius Baer Holding AG in Frankfurt. ``We're only at the beginning of an economic downturn and it will take some time for inflation to slow.''"
"German consumer confidence dropped to a five year low and business confidence declined to the lowest in three years in August, reports yesterday showed."
"The worsening European growth outlook and retreating oil prices have already prompted investors to scale back bets on the ECB raising interest rates further this year, Eonia forward contracts show. The rate on the December contract was at 4.23 percent yesterday, down from 4.40 percent a month ago."
To contact the reporter on this story: Simone Meier in Frankfurt at firstname.lastname@example.org
"Last Updated: August 27, 2008 02:54 EDT"
Canadian Dollar Strengthens to a Three-Week High as Oil Gains
By Chris Fournier
Aug. 26 (Bloomberg) -- Canada's currency climbed to the highest in almost three weeks as the price of crude oil erased an earlier loss and increased on forecasts showing Hurricane Gustav may enter the Gulf of Mexico.
The Canadian dollar strengthened versus the 16 most- actively traded currencies. Commodities account for more than half of the nation's export revenue. The U.S. is Canada's largest trading partner.
"``The Canadian dollar is benefiting from the bounce in crude, on potential Gustav-influenced supply concerns,'' said Jack Spitz, managing director of foreign-exchange trading at National Bank of Canada in Toronto, who predicts Canada's currency will weaken to C$1.08 against its U.S. counterpart by year-end."
"Canada's dollar appreciated 0.3 percent to C$1.0485 per U.S. dollar at 3 p.m. in Toronto, from C$1.0513 yesterday. The currency touched C$1.0412, the strongest since Aug. 6. It earlier fell to as low as C$1.0562. One Canadian dollar buys 95.36 U.S. cents."
"``With the move upward in oil, the Canadian dollar gained on the U.S. dollar,'' said Tyson Wright, senior currency trader at Custom House in Victoria, British Columbia. ``The Canadian dollar is in favor because our economy looks set to withstand the pressures better than the European, the U.K., the New Zealand and the Australian economies.'' He forecasts the Canadian dollar weakening to as low as C$1.10 by year-end."
"``As inflation ramps up in the U.S., we think that their interest rates will move higher and Canadian rates will be flat throughout the year. That would be supportive for the U.S. dollar,'' Wright said."
Canada's currency surged 17 percent in 2007 as commodity prices soared. The rally stalled this year as the economy of the U.S. cooled and as oil fell from the record high of $147.27 a barrel set July 11. The Canadian currency touched a year-low C$1.0728 on Aug. 12.
"The Gulf of Mexico is home to more than a fifth of U.S. oil production. Crude oil rose 1 percent to $116.24 a barrel, after earlier rising as much as 2.4 percent to $117.89. Crude had touched as low as $112.36. Natural gas, gold and silver also climbed."
"Royal Dutch Shell Plc's purchase of Duvernay Oil Corp. of Calgary ``has been a minor factor in Canadian-dollar strength today,'' said Wright. ``Flow from the transaction helped push the U.S. dollar lower amidst the oil correction.''"
"Shell, the world's second-largest energy company, agreed last month to purchase Duvernay for about C$5.27 billion ($5.03 billion). The purchase of about 61.6 million Duvernay shares will be complete by tomorrow, Shell said in a statement."
"The currency will slip to C$1.10 against the U.S. dollar by the end of 2009, according to the median forecast of economists surveyed by Bloomberg News."
"The yield on the two-year Canadian government bond declined 5 basis points, or 0.05 percentage point, to 2.83 percent. The price of the 2.75 percent security due in December 2010 rose 11 cents to C$99.82. The 10-year bond's yield slipped 3 basis points to 3.55 percent."
"The two-year bond's yield will rise to 3.09 percent by the end of this year, while the 10-year bond's yield will increase to 3.86 percent, according to the median forecasts of economists surveyed by Bloomberg News."
"The yield advantage of the 10-year U.S. Treasury note compared with similar-maturity Canadian government bonds was 23 basis points, down from 36 basis points on Aug. 11. The Canadian 10-year bond yielded 36 basis points more than its U.S. counterpart on Jan. 22."
"Canadian government bonds have returned 4.5 percent in 2008, according to Merrill Lynch & Co. index statistics. U.S. Treasuries have returned 4 percent this year."
To contact the reporter on this story: Chris Fournier in Montreal at email@example.com
"Last Updated: August 26, 2008 15:02 EDT"
Canavan Prefers BHP to Rio Tinto on Energy Exposure: Video
"Aug. 27 (Bloomberg) -- Greg Canavan, head of Australian research at Fat Prophets Management Ltd., talks with Bloomberg's Bernard Lo from Sydney about the outlook for crude oil supply and prices, and Canavan's investment strategy for BHP Billiton Ltd. and Rio Tinto Group. (Source: Bloomberg)"
"00:00 Hurricane Gustav; oil supply, price outlook"
"02:06 BHP, Rio strategy; gold as ""haven""; metals"
Running time 05:35
"Last Updated: August 26, 2008 21:47 EDT"
"Corporate Bond Risk Rises in Europe, Credit-Default Swaps Show "
"Aug. 27 (Bloomberg) -- The cost of protecting European corporate bonds from default rose, according to traders of credit-default swaps."
"Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-risk, high-yield credit ratings increased 2 basis points to 564, according to JPMorgan Chase & Co. prices at 7:42 a.m. in London. The index is a benchmark for the cost of protecting bonds against default and a rise indicates a deterioration in the perception of credit quality; a decline signals the opposite."
"The Markit iTraxx Europe index of 125 companies with investment-grade ratings rose 0.25 basis points to 100.5, JPMorgan prices show."
"A basis point on a credit-default swap contract protecting 10 million euros ($14.7 million) of debt from default for five years is equivalent to 1,000 euros a year."
"Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements."
"Credit-default swaps on the Markit CDX North America Investment Grade index, a benchmark gauge of credit risk linked to the bonds of 125 companies in the U.S. and Canada, increased 1 basis point to 144 basis points, CMA Datavision."
To contact the reporter on this story: Abigail Moses in London Amoses5@bloomberg.net
"U.S. Stocks Advance, Led by Energy Producers, Fannie, Freddie "
By Elizabeth Stanton
"Aug. 26 (Bloomberg) -- U.S. stocks advanced, rebounding from the biggest drop in a month, as higher oil prices boosted energy shares and analysts said Fannie Mae and Freddie Mac have enough capital to last the year."
"Anadarko Petroleum Corp. jumped 6.4 percent and led gains in 38 of 39 energy producers in the Standard & Poor's 500 Index as crude climbed on concern a hurricane will threaten production in the Gulf of Mexico. Freddie Mac and Fannie Mae, the largest U.S. mortgage-finance companies, jumped more than 8 percent each. Marvell Technology Group Ltd. posted its worst drop in almost two months after Jefferies & Co. downgraded the chipmaker on concern demand is slowing."
"The S&P 500 rose 4.67 points, or 0.4 percent, to 1,271.51. The Dow Jones Industrial Average increased 26.62 points, or 0.2 percent, to 11,412.87 and the Nasdaq Composite Index slipped 3.62 to 2,361.97. Almost two stocks rose for each that fell on the New York Stock Exchange."
"``We're still very favorable towards energy,'' said Julie Van Cleave, who manages $4 billion as head of large U.S. growth stocks at Deutsche Asset Management in Milwaukee. ``The earnings estimates are still very reasonable. The market's not expecting a lot out of energy companies, so we find that interesting.''"
"Trading on the NYSE was the slowest of the year for the fourth straight day, with about 856 million shares changing hands. Volume since the start of last week has been more than one-third lower than the year-to-date average."
"The S&P 500 swung between gains and losses at least 19 times as better-than-forecast reports on consumer confidence and the housing market were offset by concern that higher energy prices will reduce profits at consumer, industrial and technology companies."
The S&P 500 is down 13 percent this year as more than $500 billion in losses and writedowns related to the collapse of the subprime-mortgage market and accelerating inflation slow economic expansion and curb profit growth.
"The S&P 500 Energy Index climbed for the first time in three days and contributed the most to the market's advance on speculation that Hurricane Gustav may disrupt rigs in the Gulf of Mexico, home to a fifth of U.S. oil production and about 14 percent of natural gas output."
"Crude oil advanced for the fifth time in six days today, and natural gas climbed from a six-month low. Oil rose $1.16 to $116.27 a barrel. Natural gas climbed 5.8 percent, the most since October, to $8.28 per million British thermal units."
"Anadarko Petroleum jumped $3.70 to $61.54, the highest since July 22. The second-largest independent U.S. oil producer plans to buy back as much as $5 billion of its stock, saying its share price undervalues its net asset value."
"EOG Resources Inc., a Houston-based oil and gas producer, climbed $5.55 to $107.76. Sanford C. Bernstein & Co. analyst Ben P. Dell upgraded EOG to ``outperform'' from ``market perform'' based on the potential for gas prices to climb."
"Fannie Mae jumped 43 cents, or 8.3 percent, to $5.62 and Freddie Mac advanced 68 cents, or 21 percent, to $3.97 for the top gains in the S&P 500. The mortgage-finance companies can withstand losses through the end of the year and still keep a cushion above their minimum capital requirements, according to Citigroup Inc. analysts. Fannie and Freddie slowed the pace of purchases of home loans and mortgage bonds last month as losses sparked concern they may not weather the housing slump."
"Technology shares fell as the rebound in fuel costs deepened investor concern that slowing global economic growth will hurt profits. Before U.S. markets opened, a measure of German business confidence declined to a three-year low."
`Feeling the Effects'
"``There's a lot of concern about whether we're in a recession or tracking to a recession,'' said Keith Wirtz, chief investment officer at Fifth Third Asset Management in Cincinnati, which oversees $21 billion. ``The technology group may be feeling the effects of those kinds of sentiments.''"
"Microsoft Corp., the world's largest software maker, fell 39 cents to $27.27, the biggest decline in the Dow average."
"Marvell Technology Group Ltd. fell $1.04 to $14.63. Jefferies analyst Adam Benjamin downgraded the shares to ``hold'' from ``buy,'' citing slowing growth in the hard-disk drive market."
Most consumer discretionary companies fell today as fuel prices climbed.
"Darden Restaurants Inc. led the retreat, falling 12 percent to $28.25, its biggest drop since December and the most in the S&P 500. The owner of the Red Lobster and Olive Garden chains said first-quarter profit excluding some costs was 60 cents to 62 cents a share. Seventeen analysts surveyed by Bloomberg estimated earnings of 75 cents."
"Coach Inc. rose 6.7 percent to $28.18 for the fourth-biggest gain in the S&P 500 after announcing a share buyback plan. The largest U.S. maker of luxury leather handbags may repurchase as much as $1 billion of its shares by June 26, 2010."
"The S&P 500 rose as much as 0.7 percent during the day after the stronger-than-forecast data on home sales and consumer confidence. The index fell to its low of the day, down 0.3 percent, after minutes from the Federal Reserve's August meeting showed the central bank's next move may be an increase in interest rates."
"New home-sales increased 2.4 percent to a 515,000 annual pace in July after a downwardly revised 503,000 rate in June, the Commerce Department said. The number of unsold homes on the market fell 5.2 percent, the most since November 1963, to a 416,000 pace."
"Home prices in the U.S. fell at a slower pace in the second quarter, signaling the worst housing slump in more than 25 years may be starting to stabilize, a private survey showed today."
"Home values declined 2.3 percent in the three months through June from the previous three months, compared with a 6.8 percent drop in the first quarter. Compared with a year earlier, values dropped 15.4 percent, the most since record keeping started 20 years ago, yet less than the 16.2 percent tumble forecast by economists in a survey."
"The Conference Board's consumer confidence index rose to 56.9 in August from 51.9 in July as cheaper gasoline improved Americans' moods. June's reading of 51 was the lowest since February 1992. The median forecast was for a smaller increase to 53, the median estimate of 70 economists surveyed by Bloomberg News."
"With crude oil's retreat from a record $145.29 a barrel on July 3, the pump price of gasoline has fallen 11 percent from its record $4.114 a gallon in July, according to AAA. Yesterday's national average price for unleaded, $3.672 a gallon, was the lowest since May. It's still 93 cents higher than the year-ago price."
"The S&P 500 is little changed in August even after rebounding 4.7 percent from its low of the year on July 15. All 10 of the main industry groups in the index have declined this year, led by a 31 percent tumble in financial shares."
"Analysts estimate earnings among companies in the S&P 500 will decline 1.2 percent on average in 2008, according to weekly Bloomberg data. That compares with 15 percent growth forecast at the beginning of the year."
To contact the reporter on this story: Elizabeth Stanton in New York at firstname.lastname@example.org.
"Last Updated: August 26, 2008 16:42 EDT"
"Canadian Stocks Advance, Led by EnCana; Scotiabank Falls "
By John Kipphoff
"Aug. 26 (Bloomberg) -- Canadian stocks rose for the first time in three days as EnCana Corp. led a rally in energy companies, on a surge in natural gas and higher oil prices."
"Bank of Nova Scotia and Bank of Montreal paced a retreat among financial companies, after both reported earnings that fell short of analyst estimates."
"The Standard & Poor's/TSX Composite Index added 0.1 percent to 13,299.07 in Toronto. Canada's equity benchmark, which derives three-quarters of its value from energy, financial and materials shares, has slid 12 percent from its June 18 peak after commodity prices slumped on concern lenders' credit losses will slow global growth and demand for resources."
"``Commodities are having a rebound from oversold levels,'' said Andrew Cook, portfolio manager at Marquest Investment Counsel in Toronto, which manages the equivalent of about $286 million. ``There's been a growth scare that's hit them. We think growth will pick up again in 2009. The consensus seems to be that the banks are still a terrible place to be.''"
"EnCana, North America's biggest publicly traded gas producer, rose 3.3 percent to C$77.60. Smaller rival Canadian Natural Resources Ltd. gained 1.7 percent to C$87.55. Imperial Oil Ltd., Canada's biggest oil and gas producer by output, gained 2.2 percent to C$53.98. Nexen Inc., another oil and gas producer, added 2.1 percent to C$33.24."
"Natural gas in New York rose 6 percent to $8.293 per million British thermal units, the most since Oct. 30, on speculation Hurricane Gustav will slash through the Gulf of Mexico and pare output of gas and oil from production platforms. Crude oil rose more than $1 a barrel rallying from a drop."
"A measure of energy companies in the S&P/TSX rose 1.2 percent, while a gauge of financial shares dropped 1 percent."
"Scotiabank fell 2.5 percent to C$46.45, the lowest in six weeks. Canada's third-biggest lender reported that fiscal third- quarter net income fell 1.9 percent to C$1.01 billion ($967.2 million) after it set aside C$159 million for bad loans in the quarter, a 73 percent increase from a year earlier."
"Excluding one-time items, profit was 99 cents a share, according to National Bank Financial analyst Robert Sedran, missing his C$1.04-a-share estimate. Scotiabank said that because of slower economic growth globally, it's ``unlikely'' to meet its earnings-per-share growth target for the year."
Bank of Montreal fell 0.3 percent to C$43.94. Canada's fourth-largest bank posted a 21 percent drop in third-quarter profit and missed analysts' median estimate of per-share earnings before one-time items by 20 cents.
"Bank of Montreal set aside C$484 million for bad loans, five times more than a year ago. The stock was downgraded to ``sell'' by Dundee Securities Corp. analyst John Aiken in Toronto, who called the results ``disappointing.''"
"Royal Bank of Canada, scheduled to report its quarterly earnings on Aug. 28, slipped 2.1 percent to C$44.20."
To contact the reporter on this story: John Kipphoff in Toronto at email@example.com.
"Last Updated: August 26, 2008 17:01 EDT"
Indian Rupee Rises on Speculation Central Bank Will Seek Gains
By Anoop Agrawal
"Aug. 27 (Bloomberg) -- India's rupee rose, ending two days of losses, on speculation the central bank will seek gains in the currency to curb the fastest price increases in 16 years."
"Asia's third-largest economy, which meets three-quarters of its energy needs from abroad, is grappling with inflation that accelerated at the fastest pace since July 1992. The rupee climbed from yesterday's 17-month low as oil prices gained for a third day."
"``The rupee's fall this week has increased speculation the central bank will intervene and stabilize the markets,'' said Ravindra Babu, a currency trader at state-owned Andhra Bank in Mumbai. ``I think the rupee will halt its slide.''"
"The rupee strengthened 0.3 percent to 43.7350 a dollar as of 9:42 a.m. in Mumbai, according to data compiled by Bloomberg."
To contact the reporter on this story: Anoop Agrawal in Mumbai at firstname.lastname@example.org.
"Last Updated: August 27, 2008 00:15 EDT"
Italian Consumer Confidence Rebounds From 15-Year Low (Update1)
By Steve Scherer
Aug. 27 (Bloomberg) -- Italian consumer confidence bounced back from a 15-year low in August as oil prices fell from record highs and expectations for economic growth improved.
"The Rome-based Isae Institute's index, calculated from a survey of 2,000 families, rose to 99.5 from 95.8 last month. Economists had expected an increase to 96.4, according to the median of 12 forecasts collected by Bloomberg."
"Oil prices have receded 21 percent from a record $147.27 a barrel reached on July 11, prompting gasoline prices to decline as Italians embarked on their traditional summer vacations. Italy's economy, Europe's fourth-biggest, will expand less than the rest of the world's advanced economies this year, the International Monetary Fund forecast last month."
"``This is a rebound, but it's doubtful that it signals a real turnaround,'' said Marco Valli, an economist with UniCredit Group in Milan. ``The strong fall in oil prices clearly helped confidence, which had collapsed in recent months.''"
"Italians were less worried about inflation over the next year than they were a month ago, the Isae report said. An index measuring expectations for higher prices in coming months fell to 19 from 25 in July."
"``Judgments and forecasts regarding the economic situation of the country showed substantial signs of improvement after July's decline,'' Isae said."
"An index measuring concern about the current economic situation rose to minus 128 from minus 136, while another gauging the short-term outlook rose to minus 46 from minus 55. Concern about unemployment fell to 56 from 59, according to the survey."
"The rebound may be short lived. Italy's economy unexpectedly shrank in the second quarter, according to an Aug. 8 report, edging it closer to the fourth recession in a decade as households and businesses struggle to cope with more expensive energy costs. Italy's inflation rate held at its highest in more than six years in July as food and gasoline costs rose, crimping household spending power."
"Italy's economy will expand 0.5 percent this year and the next, the slowest among the world's advanced economies, the IMF said in July. Growth has trailed the European Union average for more than a decade."
"Falling consumer spending is hurting the bottom line at some companies. Bulgari SpA, the world's third-largest jeweler, lowered its forecasts for sales and profit this year after saying earlier this month that net income dropped in the second quarter due to declining demand."
"The gain in Italian confidence contrasts with growing pessimism among other Europeans. German consumer confidence slumped to the lowest level in five years, Nuremberg-based market research company GfK AG said yesterday."
"To fight inflation, the European Central Bank raised its benchmark interest rate on July 3 by 25 basis points to 4.25 percent. The move will raise borrowing costs for anyone seeking a mortgage to buy a home and could further slow economic growth."
The Isae survey was conducted between Aug. 1 and Aug. 20.
To contact the reporter on this story: Steve Scherer in Rome at email@example.com
"Last Updated: August 27, 2008 03:53 EDT"
Japan's Inflation Probably Exceeded 2% for First Time in Decade
By Mayumi Otsuma
"Aug. 27 (Bloomberg) -- Japan's consumer-price inflation probably exceeded 2 percent for the first time in a decade as companies passed rising costs onto households, deterring spending and weakening the economy."
"Core prices, which exclude fresh food, climbed 2.3 percent in July from a year earlier after rising 1.9 percent in June, according to the median estimate of 37 economists surveyed by Bloomberg ahead of government figures to be released Aug. 29."
"Price increases are unlikely to prompt the Bank of Japan to raise interest rates anytime soon because the economy is on the brink of a recession and Governor Masaaki Shirakawa expects inflation will ease. Factory output and household spending fell in July and the jobless rate stayed close to a two-year high, analysts predict separate reports will show on the same day."
"``Consumer prices will probably begin to decelerate in the fourth quarter but continue to damp consumption at least until early next year,'' said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. ``The next rate increase will be in the third quarter of 2009 at the earliest, and only after the bank confirms a pickup in the economy.''"
"Only one of the economists predicted July inflation at lower than 2 percent. Core prices haven't risen 2 percent since January 1998, when they were boosted by a sales tax increase. Excluding the tax, they last gained that much 16 years ago."
"Shirakawa said this week that core price gains will moderate after accelerating ``slightly'' in coming months. There are few signs commodity-driven inflation is spreading because wage growth is weak, he said. Crude oil has fallen 21 percent since exceeding $147 a barrel for the first time on July 11."
"Excluding food and energy, prices rose 0.1 percent in July from a year earlier, economists predict, the same pace as June and only the third gain since 1998. Faster increases in the gauge would be the ``key factor'' in determining interest-rate action by the central bank, said Takuji Okubo, a senior economist at Merrill Lynch & Co. in Tokyo."
The Bank of Japan has kept the key overnight lending rate at 0.5 percent since doubling it in February 2007. It shelved a policy of gradual rate increases in April.
"Demand for goods and services slipped below Japan's productive capacity for the first time in almost two years last quarter, a Cabinet Office report on the output gap showed this week, adding to signs that inflation remains subdued. The central bank last week described the world's second-largest economy as ``sluggish'' for the first time in a decade, after a report showed gross domestic product fell an annualized 2.4 percent in the second quarter."
"``As oil-driven inflation eases, the pace of consumer-price gains will also slow, while the economy's weakening demand will make it difficult for companies to raise prices,'' said Akira Maekawa, an economist at UBS AG in Tokyo. ``Core prices will probably peak at around 2.5 percent in the current quarter.''"
"Bank of Japan policy makers consider core prices to be stable between zero and 2 percent. Breaching the range ``will only be temporary and probably won't induce any policy action,'' said Ryutaro Kono, chief economist at BNP Paribas in Tokyo."
"Core prices in Tokyo, a harbinger of nationwide inflation, advanced 1.7 percent in August from a year earlier, according to the median estimate of 34 economists. Prices in the capital increased 1.6 percent in July."
"Kokuyo Co., an Osaka-based stationery maker, this week said it will raise prices of photocopy paper by 9 percent in October to reflect higher costs of oil and wood chips. Tokyo Electric Power Co. plans to adopt a new pricing system next month to better respond to changes in fuel expenses."
"Carmakers, which had managed to absorb cost increases by increasing productivity, are also attempting to charge more."
"Toyota Motor Corp., Japan's largest automaker, said this week that it will raise prices on some domestic models for the first time in 16 years, paving the way for smaller rivals to follow suit. Still, Toyota plans to limit price increases to popular hybrids, such as the Prius, and some commercial vehicles."
"``It's still doubtful that retail price increases of cars and other durable goods will spread at a time when consumption is so weak,'' said Shinke of Dai-Ichi Life. ``It's still hard to expect the Japanese economy to head into overall inflation.''"
"Household sentiment fell to the lowest level in at least 26 years in July, and consumers' willingness to buy long-lasting products also slid to a record low."
"Weakening demand at home and abroad prompted companies to cut production 0.4 percent in July from a month earlier, a second consecutive decline, economists estimate. Household spending dropped for a fifth month and the unemployment rate stayed at 4.1 percent, according to analysts surveyed."
To contact the reporter on this story: Mayumi Otsuma in Tokyo at firstname.lastname@example.org
"Last Updated: August 26, 2008 11:01 EDT"
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